Ted owns a bond which is callable in 2.5 years. The bond has a 6 percent coupon, pays interest semiannually, has a par value of $1,000, and has a yield to call of 6.3 percent. What is the call premium if the bond currently sells for $1,044.54? Hint: Call premium is the difference between call price and par value.
A. $50
B. $60
C. $70
D. $75
E. $80
Cochran's Furniture Outlet is issuing 25-year, 9 percent callable bonds. These bonds are callable in 4 years with a call premium of $45. The bonds are being issued at par and pay interest semi-annually. What is the yield to call?
A. 9.94 percent
B. 10.72 percent
C. 11.00 percent
D. 11.47 percent
E. 12.08 percent
A 6 percent, semiannual coupon bond has a yield to maturity of 7.4 percent and a Macaulay duration of 5.7. The bond has a modified duration of _____ and will have a _____ percentage increase in price in response to a 25 basis point decrease in the yield to maturity.
A. 5.4829; 1.35
B. 5.4966; 1.32
C. 5.4966; 1.37
D. 5.3073; 1.33
E. 5.3073; 1.38