What is the make-whole call premium

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Question - Assume that Kendal Corp. has an outstanding bond issue with a par value of $1,000 and a current market price of $1,040.70 per bond. The bond has seven years remaining and a coupon rate of 6 percent.

Required -

a. Find the current yield to maturity for the Kendal Corp. bond.

b. If the bond trades at a yield spread of 2.22 percent above comparable U.S. Treasury notes, what must the current yield on Treasury notes be?

c. If the Kendal bond has a make-whole call premium of 130 basis points above the U.S. Treasury rate, what is the make-whole call premium?

Reference no: EM132788268

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