Answer:
Yield to call is 9.8%
Explanation:
The rate of return bonholders receives on a callable bond until the call date is called Yield to call.
Yield to Call = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]
C = Coupon Payment = $105 per year
F = Face value = $1,000
P = Call price = $1,100
n -= number of years to call = 5
Yield to Call = [ $105 + ( $1,000 - $1,100 ) / 5 ] / [ ( $1,000 + $1,100 ) / 2 ]
Yield to Call = [ $105 - 2 ] / $1,050 = $103 / $1,050 = 0.098 = 9.8%
The Yield to call is 9.8%
Yield to Call = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]
Here
C = Coupon Payment = $105 per year
F = Face value = $1,000
P = Call price = $1,100
n -= number of years to call = 5
So, it should be
= [ $105 + ( $1,000 - $1,100 ) / 5 ] / [ ( $1,000 + $1,100 ) / 2 ]
= [ $105 - 2 ] / $1,050 = $103 / $1,050
= 0.098
= 9.8%
Learn more about yield here: https://brainly.com/question/224985
