Keenan industries has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon, semiannual payments, and a $1,000 par value. the bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,045. what is the bond's nominal yield to call

4.40

Explanation:

For the nature of the Yield to Call and Yield to maturity

You can eiher solve with excel, a financial calculation or with approximation method

This will be the formula for approximation method

PTM=41.25 (1,000 x 8.25 = 82.5 annual interest divide by 2 as there are semiannual payment)

C=1045 This is the value of the called bond

F=1000 The face value of the bond

n=12 (6 years 2 payment per year)

We plug this into the formula and solve

partiel result of the upper part: 45

partial result, divisor:1022.5

quotient4.4009780%

this business is a price setter.

hope this

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