BTR Co. has 9% annual coupon bonds that are callable andhave 18 years left until maturity.The bonds have a par value of 1,000 and their current market price is $1,190.35. However BTR Co may call the bonds in eight ears at a call price of $1060.What are the YTM and the yield to call (YTC) on BTR C0's bonds?
YTM value (possible answers) a) 8.88% b)9.59% c) 7.93% d)7.09%
YTC vlaue (possible answers) a) 7.09% b) 9.59% c) 6.47% d) 8.82%
1a) If the interest rates are expected to remin constand, what is the best estimate of the remaining life left for BTR's Co's bonds?
a) 18 years b)5 years c) 10 years d)8 years
1c) If BTR Co. issued new bonds today, what coupon rate must the bonds have to be issues at par?
a) 6.47% b)7.93% c)10.46 % d)7.09%