A bond with a coupon rate of 11% will mature in 18 years. The current market rate of interest is 8.5%. It is currently trading at $1,189.95.
What is the value of this bond today?
Should you purchase this bond? Why or why not?
(You have to answer this question yourself. Don’t forget to give the reason for purchase or not purchase.)
If this bond is a callable bond and is expected to be called in six years for $1,030. What is the value of this bond today considering the call?
What is the Yield-to-Call?
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