25-year, 8% semiannual coupon bond with a par value of $1,000 may be called in 4

Question

25-year, 8% semiannual coupon bond with a par value of $1,000 may be called in 4 years at a call price of $1,100. The bond sells for $950. (Assume that the bond has just been issued.)

What is the bond's yield to maturity? Round your answer to two decimal places.
 %

What is the bond's current yield? Round your answer to two decimal places. 
 %

What is the bond's capital gain or loss yield? Loss should be indicated with minus sign. Round your answer to two decimal places.
 %

What is the bond's yield to call? Round your answer to two decimal places.
 %

Explanation / Answer

Yield to maturity Bond current yield FV 1000 80/950 PV 950 8.42% PMT 40 (1000 x 8%/2) NPER 50 (25 x 2) YTM 8.48% =RATE(50,40,-950,1000)*2 Bond Capital gain or loss yield YTM - Current Yield 8.48%-8.42% 0.06% Yield to call FV 1100 Call price PV 950 PMT 40 (1000 x 8%/2) NPER 8 (4 x 2) YTM 11.63% =RATE(8,40,-950,1100)*2

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