The advantage of wallmart issuing callable bonds

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Reference no: EM131328856

Instructor's question: What would be the advantage of Wallmart issuing "callable bonds"? What would that do to the price?

my initials post:

Wal Mart

Coupon Rate

5.00%

Maturity Date

10/25/2040

Last Traded Price $121.69

Last Trade Yield 3.637%

Last Trade Date 10/27/2016

Par Value 1,000

Coupon Payment $25.00 = 1000*(5%/2)

Interest Rate 1.819% = 3.637%/2

Nper 48 = (2040-2016) *2

Price of Bond $1,216.97 = PV (B3, B4-B2, B1)

With the current price of the bond at $1,216.96 it is considered a premium bond. This is because it is selling for more than the par value of the bond. Credit rating as well as interest rates certainly provides a good push regarding the power of the bond. The economy and inflation will also have an impact on the cost of a bond.

Reference no: EM131328856

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