Company has the following bonds outstanding:
M (Par) = $1000
N (Maturity) = 10 years
Coupon Rate = 8% .... Coupon Payment = $80 (1000*.08)
- If the bonds are currently selling for $774, what is the yield-to-maturity on them? (When calculating out I get 11.57%; but when using Rate function in excel I get 12.00%)... I would like to see proper result.
- If the bonds are currently selling for $950 and could be called in five years for $1020, what is their yield-to-call? (Do I use the same YTM formula and replace N with 5 years, and FV with 1020? Would like to see this calculation and understand when the company would call the bonds vs not call them)