The bond note said, "...callable at prices decreasing from 105% of face around currently to 100% in 2007."
What is the 105% mean?? how do i calculate the callable interest rate?
2007-06-26 09:19:05 · 4 answers · asked by BBMak 2 in Business & Finance ➔ Investing
105% means that the issuing company retains the right to buy the bond back at 105% of its face value.
As to "callable interest rate", there is no such thing. Did you mean yield to call?
2007-06-26 10:36:04 · answer #1 · answered by NC 7 · 1⤊ 0⤋
The 105% means that a $1000 face value bond can be called by paying 105% of the face value ($1050). The interest due is not impacted. If the bond has a coupon rate of 4%/yr and is paid every 6 months, and the bond is called at a coupon date, the holder would surrender the bond for $1050 plus $20 interest.
2007-06-26 09:44:01 · answer #2 · answered by skipper 7 · 0⤊ 0⤋
You're going to get 105% of the face value if the bond is called right now. For a bond with a face value of $1000 that's $1050. What's the bond selling for now? What would the holding period be? Do the math.
2007-06-26 12:34:37 · answer #3 · answered by Oh Boy! 5 · 0⤊ 0⤋
The interest rate is as low as it can go. Bonds are not recommended presently and there are predicted to be lots of losses people are not expecting. Since companies can borrow money in the U.S. right not for around 1%, why would a company offer that kind of interest for a bond?
2016-05-21 02:08:46 · answer #4 · answered by steven 3 · 0⤊ 0⤋