Sadik Inc

Finance Feb 03, 2021

Sadik Inc.'s bonds currently sell for $1,140 and have a par value of $1,000. They pay a $150 annual coupon and have a 15-year maturity, but they can be called in 4 years at $1,060. What is their yield to call (YTC)?

A.12.50%

B.10.55%

C.11.68%

D.12.85%

Expert Solution

Computation of Yield to Call using Rate Function in Excel:

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

Here,

Rate = Yield to Call = ?

Nper = 4 years

PMT = $150

PV = $1,140

FV = $1,060

Substituting the values in formula:

=rate(4,150,-1140,1060)

Rate or Yield to Call = 11.68%

The correct option is C "11.68%".

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote