Chocolate Mint is issuing 30-year, 9 percent callable bonds. These bonds are callable in 5 years with all premium of $80. The bonds are being issued at par and pay interest semi-annually. What is the ield to call? (A) 12.89 percent B 11.00 percent C10.72 percent 10.26 percent

Chocolate Mint is issuing 30-year, 9 percent callable bonds. These bonds are callable in 5 years with all premium of $80. The bonds are being issued at par and pay interest semi-annually. What is the ield to call? (A) 12.89 percent B 11.00 percent C10.72 percent 10.26 percent

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter6: Bonds (debt) - Characteristics And Valuation

Section: Chapter Questions

Problem 9PROB

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Concept explainers

Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.

Question

Chocolate Mint is issuing 30-year, 9 percent callable bonds. These bonds are callable in 5 years with a
call premium of $80. The bonds are being issued at par and pay interest semi-annually. What is the
yield to call?
A) 12.89 percent
B 11.00 percent
(C) 10.72 percent
D
E
10.26 percent
12.47 percent

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