Below is information about various bonds as of November 6, 2020, retrieved from www

We can calculate the yield to maturity for Clorox bonds by using the following formula in excel:-

=rate(nper,pmt,-pv,fv)

Here,

Rate = Yield to maturity (semiannual)

Nper = 19.50*2 = 39 periods (semiannual)

Pmt = Coupon payment = $1,000*1.80%/2 = $9

PV = $1,099.54

FV = $1,000

Substituting the values in formula:

= rate(39,9,-1099.54,1000)

= 0.61%

Yield to maturity = Rate * 2

= 0.61% * 2

= 1.22%

Computation of the current yield for Clorox bonds:-

Current yield = Annual coupon payment / Current price of the bond

= $1,000*1.80% / $1,099.54

= 1.64%

Computation of the capital gains yield for Clorox bonds:-

Capital gains yield = YTM - Current yield

= 1.22% - 1.64%

= -0.41%

We can calculate the price for Ford bonds by using the following formula in excel:-

=-pv(rate,nper,pmt,fv)

Here,

PV = Price for Ford bonds

Rate = 4.150%/2 = 2.075% (semiannual)

Nper = 5.13*2 = 10.26 periods (semiannual)

Pmt = Coupon payment = $1,000*4.05%/2 = $20.25

FV = $1,000

Substituting the values in formula:

= -pv(2.075%,10.26,20.25,1000)

= $995.42

Computation of the current yield for Ford bonds:-

Current yield = Annual coupon payment / Price of the bond

= $1,000*4.05% / $995.42

= 4.07%

Computation of the capital gains yield for Ford bonds:-

Capital gains yield = YTM - Current yield

= 4.150% - 4.07%

= 0.08%

We can calculate the yield to call for Clorox bonds by using the following formula in excel:-

=rate(nper,pmt,-pv,fv)

Here,

Rate = Yield to call (semiannual)

Nper = 4.5*2 = 9 periods (semiannual)

Pmt = Coupon payment = $1,000*1.80%/2 = $9

PV = $1,099.54

FV = Call value = $1,060

Substituting the values in formula:

= rate(9,9,-1099.54,1060)

= 0.43%

Yield to call = Rate * 2

= 0.43% * 2

= 0.85%

Yes, the bonds are likely to be called.