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USE TI 83/84 CALCULATOR TO SOLVE A 10-year, 8 percent coupon, $1,000 par value bond’s current...

USE TI 83/84 CALCULATOR TO SOLVE

A 10-year, 8 percent coupon, $1,000 par value bond’s current price is $875. Interest from this bond is paid semiannually. This bond has a call provision that kicks in four years from today. If the bond is called on the first date possible, the firm will have to pay a call price equal to $1,050. What is this bond’s yield to call (YTC)?

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Answer #1

Calculating Yield to Call,

Using TVM Calculation,

I = [PV = -875, FV = 1,050, PMT = 40, N = 8]

I = 15.24%

Yield to Call = 15.24%

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