Yield to maturity-what is their nominal yield to call

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Yield to maturity

A firm's bonds have a maturity of 8 years with a $1,000 face value, have an 8% semiannual coupon, are callable in 4 years at $1,044, and currently sell at a price of $1,087.24.

What is their nominal yield to maturity? Round your answer to two decimal places.

Answer: ____%

What is their nominal yield to call? Round your answer to two decimal places.

Answer: ____%

Expectations Theory

Interest rates on 4-year Treasury securities are currently 6.6%, while 6-year Treasury securities yield 7.25%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Round your answer to two decimal places.

Answer: _______%

Reference no: EM131628537

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