Question

A 10% coupon bond, $1,000 par value, annual payments, 10 years to maturity is callable in 3 years at a call price of $1,100. If the bond is selling today for $975, the yield to call is _________.

Answer 1

13.98%.

FV = 1100, n = 3, PMT = 100, PV = -975, i = 13.98%.