(SOLVED) A 7 corporate bond with 6 years to maturity has


Question Description:

$15

A 7% corporate bond with 6 years to maturity has a Canada call. The bond’s yield to maturity is 4.8%. The call price must offer an equivalent yield to a Canada bond plus .35%. Currently, 6-year Government of Canada bonds are yielding 4%. Assume coupons are paid annually.
a. What is t he current bond price?
b. What is the current call price?

Answer

$15