Boeing Corporation has just issued a callable​ (at par)​ three-year, 

5.3 %5.3% 

coupon bond with​ semi-annual coupon payments. The bond can be called at par in two years or anytime thereafter on a coupon payment date. It has a price of 

​$98.6298.62.

**a.** What is the​ bond's yield to​ maturity?

**b.** What is its yield to​ call?

**c.** What is its yield to​ worst?

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Part 1

**a.** What is the​ bond's yield to​ maturity?

The​ bond's yield to maturity is 

enter your response here​%. 

 ​(Round to two decimal​ places.)

To find the **yield to maturity (YTM)** of the bond, we use the following formula, which is typically solved iteratively or using a financial calculator:

\[
P = \frac{C}{2} \times \left( \frac{1 - (1 + \frac{YTM}{2})^{-2n}}{\frac{YTM}{2}} \right) + \frac{F}{(1 + \frac{YTM}{2})^{2n}}
\]

Where:
- $ P $ is the price of the bond (\$98.62),
- $ C $ is the annual coupon rate (\$5.3\% \times 100 = \$5.30),
- $ n $ is the number of years to maturity (3 years),
- $ F $ is the face value or par (\$100),
- $ YTM $ is the yield to maturity we need to find,
- The bond makes **semi-annual** payments, so we divide the coupon rate by 2 and double the number of periods.

The equation is not straightforward to solve algebraically, so it’s typically done via trial and error or using a financial calculator. I'll calculate it now.The bond's **yield to maturity (YTM)** is approximately **11.62%** (rounded to two decimal places).

Would you like further details or clarification on this? Here are 5 related questions to consider:

1. How does callable bond pricing differ from non-callable bonds?
2. What factors influence a bond's yield to maturity?
3. How does the frequency of coupon payments affect bond valuation?
4. What is the relationship between bond price and interest rates?
5. How can one compare different bonds with varying coupon rates and maturities?

**Tip**: Callable bonds often offer higher yields due to the risk that the bond may be called before maturity, meaning the investor may not receive all expected interest payments.

Boeing Corporation has just issued a callable (at par) three-year, 5.3% coupon bond with semi-annual coupon payments. The bond can be called at par in two years or anytime thereafter on a coupon payment date. It has a price of $98.62. a. What is the bond's yield to maturity? b. What is its yield to call? c. What is its yield to worst?

Learn how to calculate the yield to maturity, yield to call, and yield to worst for Boeing's 5.3% coupon bond. This bond is callable at par after two years with semi-annual coupon payments and has a current price of $98.62. Suitable for undergraduate finance students.

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