Q:
A:
A
10year, 8% coupon bond is currently trading at 98.5
of par. This bond is callable in 5years at a price
of 101.5. However, it also has a putable feature which
comes into effect in 4 years at a strike price of 97.5.
What is this bond's current yield to put measure?
a) 7.90%
b) 8.22%
c) 8.62%
d) 8.11%
a) 7.90%
b) 8.22%
c) 8.62%
d) 8.11%
The correct answer is: a)
In your approved calculator, key the following amounts
and solve for i:
FV = 97.5
PMT = 4
n = 8
PV = 98.5
i = ? = 3.95
Therefore, YieldtoPut = 3.95 x 2 = 7.90%
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RELATED TERMS

At Par
A term that refers to a bond, preferred stock or other debt obligation ... 
Future Value  FV
The value of an asset or cash at a specified date in the future ... 
Coupon Rate
The yield paid by a fixed income security. A fixed income security's ... 
Par
Short for "par value," par can refer to bonds, preferred stock, ... 
Dollar Price
The percentage of par, or face value, at which a bond is quoted. ... 
Discount Bond
A bond that is issued for less than its par (or face) value, ...