A 4.00 percent coupon municipal bond has 12 years left to maturity and has a pri

Question

A 4.00 percent coupon municipal bond has 12 years left to maturity and has a price quote of 106.80. The bond can be called in eight years. The call premium is one year of coupon payments. (Assume interest payments are semiannual and a par value of $5,000.) Compute the bonds current yield. (Round your answer to 2 decimal places.) Current yield % Compute the yield to maturity. (Round your answer to 2 decimal places.) Yield to maturity % Compute the taxable equivalent yield (for an investor in the 35 percent marginal tax bracket). (Round your answer to 2 decimal places.) Equivalent taxable yield % Compute the yield to call. (Round your answer to 2 decimal places.) Yield to call %

Explanation / Answer

corrent yield= 4.35/107.5= 4.047% or 4.05% YTM= 4.35PVIFA(YTM,15)+ 1000PVIF(YTM,15) YTM= 3.69%

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