General Electric has just issued a callable (at par) 10-year, 5.8% coupon bond w
ID: 3220990 • Letter: G
Question
General Electric has just issued a callable (at par) 10-year, 5.8% coupon bond with annual coupon payments. The bond can be called at par In one year or anytime thereafter on a coupon payment date. It has a price of $102.36. a. What is the bond's yield to maturity? b. What is its yield to call? c. What is its yield to worst? a. What is the bond's yield to maturity? The bond's yield to maturity is %. (Round to two decimal places.) b. What is its yield to call? The yield to call is %. (Round to two decimal places.) e. What is its yield to worst? The yield to worst is %. (Round to two decimal places.)Explanation / Answer
a)
PV = -1023.2
FV = 1000
N = 10
PMT = 63
YTM =Annual Interest + (Call price - Market Price)/No. of years to Call] / (Call price-Market Price)/ 2
YTM = 5.9850%
b)PMT = 63
FV = 1000
N = 1
PV = -1023.2
yield to call = 3.8898%
c. yield to worst = 3.8898%
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