Problem:
A 5.5% coupon municipal bond has 16 years left to maturity and has a price quote of 92.55. The bond can be called in 9 years. The call premium is one year of coupon payments.
Required:
Question: Compute the bond's yield to maturity and yield to call. Assume interest payments are paid semiannually and a par value of $5,000.
- YTM = 6.91%; YTC = 7.52%
- YTM = 6.24%; YTC = 7.08%
- YTM = 5.78%; YTC = 6.61%
- YTM = 5.92%; YTC = 6.85%
Note: Please show the work not just the answer.