Assignment:
A bond with a face value of $1,000 matures in 12 years and has a 9 percent semiannual coupon. (That is, the bond pays a $45 coupon every six months). The bond currently has a nominal annual yield to maturity of 7.5 percent, and it can be called in 4 years at a call price of $1,045. How much should you be willing to pay for this bond today (on December 4, 2011)? Also, if this bond is called in 4 years (on 12/4/2015), what is the bond's nominal annual yield to call?
Current Bond Price, VB, on 12/4/2011 = ____________________.
Yield to Call = ____________________.