Issuance Date= 6/12/2014 Settlement Date= 4/12/2015 Maturity Date= 6/11/2024 Cou

Question

Issuance Date= 6/12/2014 Settlement Date= 4/12/2015 Maturity Date= 6/11/2024 Coupon Rate= 8.750% Current Market Price=                 98 Redemption value at Maturity %=               100 Coupon Pmts per year= 2 Call Provision Year Call Price Dates Year 1 from Issuance Date= 105 6/12/2015 Year 2 from Issuance Date= 104 6/11/2016 Year 3 from Issuance Date= 103 6/11/2017 Year 4 from Issuance Date= 102 6/11/2018 Year 5 from Issuance Date= 101 6/11/2019 YTM = YTC year (4) = YTW = Issuance Date= 6/12/2014 Settlement Date= 4/12/2015 Maturity Date= 6/11/2024 Coupon Rate= 8.750% Current Market Price=                 98 Redemption value at Maturity %=               100 Coupon Pmts per year= 2 Call Provision Year Call Price Dates Year 1 from Issuance Date= 105 6/12/2015 Year 2 from Issuance Date= 104 6/11/2016 Year 3 from Issuance Date= 103 6/11/2017 Year 4 from Issuance Date= 102 6/11/2018 Year 5 from Issuance Date= 101 6/11/2019 YTM = YTC year (4) = YTW =

Explanation / Answer

YTM = [Interest*(1-tax) + (Rv- Mv)/n] / [(Rv+Mv)/2]

=[ 4.2875 + (100 -98)/10] / [(100+98)/2]

= 4.53%

YTC = [Interest + (Cv-Mv)/n ] / [(Cv+Mv)/2]

=[ 4.2875 + (102 -98)/10] / [(102+98)/2]

= 4.6875%

YTW = [ 4.2875 + (105 -98)/10] / [(105+98)/2]

= 4.91 %

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