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23 Nov 2019

Suppose East Coast Yachts issues the coupon bonds with a make-whole call provision. The make-whole call rate is the Treasury rate plus .40 percent. If East Coast calls the bonds in seven years when the Treasury rate is 4.8 percent, what is the call price of the bond? What if it is 8.2 percent?

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Jamar Ferry
Jamar FerryLv2
12 Oct 2019
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A firm is considering the purchase of a $1,000 New Haven Municipal Bond. The city is raising funds for a much needed advertising campaign to promote its East Coast community. The stated coupon rate is 5%, paid quarterly. The bond will mature in 10 years. The YTM for similar bonds is 4%. What should the market price of the bond be? What is the effective rate? What should the market price be if the coupon were paid annually? What should the market price of the bond be if YTM were 7% annually? What is the Yield to Call if the bond is callable in 7 years at a 6% premium?

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