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What is the yield-to-maturity

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Reference no: EM131873857

Company has the following bonds outstanding:

M (Par) = $1000

N (Maturity) = 10 years   

Coupon Rate = 8% .... Coupon Payment = $80 (1000*.08)

  1. 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.
  2. 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)

Reference no: EM131873857

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