A:
A 10-year, 8% coupon bond is currently trading at 98.5 of par. This bond is callable in 5-years 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%

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, Yield-to-Put = 3.95 x 2 = 7.90%

RELATED FAQS
1. ### What types of fees apply to checking accounts?

Learn about the difference between a bond's coupon rate and its yield to maturity, and how the par value, coupon rate and ... Read Answer >>
2. ### Can the marginal propensity to consume ever be negative?

Find out when a bond's yield to maturity is equal to its coupon rate, and learn about the basic components of bonds and how ... Read Answer >>

Find out what it means when a bond has a coupon rate of zero and how a bond's coupon rate and par value affect its selling ... Read Answer >>
4. ### What is the relationship between current yield and yield to maturity (YTM)?

Learn about the relationship between a bond's current yield and its yield to maturity, including how the market price of ... Read Answer >>
5. ### Should investors focus more on the current yield or face value of a bond?

Find out when investors should focus on a bond's current yield versus its face value, including an example of how current ... Read Answer >>
6. ### Joe just bought a house for \$750,000, of which 65% was financed with a 20 year ... ...

The correct answer is: c) Step 1: Compute the amount of the mortgage 65% of 750,000 = 487,500 Step 2: Compute the annual ... Read Answer >>
Related Articles
1. Investing

### Understanding Bond Prices and Yields

Understanding this relationship can help an investor in any market.
2. Investing

### How Does A Bondâ€™s Coupon Interest Rate Affect Its Price?

All bonds come with a coupon interest rate, which is the fixed annual interest a bond pays.
3. Investing

### Explaining the Coupon Rate

Coupon rate is the stated interest rate on a fixed income security.
4. Investing

### 5 Basic Things To Know About Bonds

Learn these basic terms to breakdown this seemingly complex investment area.

### Simple Math for Fixed-Coupon Corporate Bonds

A guide to help to understand the simple math behind fixed-coupon corporate bonds.
6. Investing

### What is a Premium Bond?

A premium bond is one that trades above its face or nominal amount.
7. Investing

### Guide To Embedded Options In Bonds

Investors should be aware of embedded options that may be available in certain securities as these options may affect the value of the security.
8. Investing

### Comparing Yield To Maturity And The Coupon Rate

Investors base investing decisions and strategies on yield to maturity more so than coupon rates.
9. Investing

### Understanding Bond Quotes

A bond quote is a bondâ€™s trading price.
RELATED TERMS
1. ### Par Value

The face value of a bond. Par value for a share refers to the ...
2. ### Coupon Rate

The yield paid by a fixed income security. A fixed income security's ...
3. ### Dollar Price

The percentage of par, or face value, at which a bond is quoted. ...
4. ### Below Par

A term describing a bond whose price is below the face value ...
5. ### Current Coupon Bond

A bond with a coupon rate that is within 0.5\% of the current ...
6. ### Current Yield

Annual income (interest or dividends) divided by the current ...
Hot Definitions
1. ### Return on Market Value of Equity - ROME

Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
2. ### Majority Shareholder

A person or entity that owns more than 50% of a company's outstanding shares. The majority shareholder is often the founder ...