A 10-year, 8% semi-annual fixed coupon callable bond can be called after 5 years from issuance at a call price of 101. 2 years after its issuance, the price of the bond has dropped to 97 per 100 par. Calculate the yield-to-call at this point.

 

Sample solution

Dante Alighieri played a critical role in the literature world through his poem Divine Comedy that was written in the 14th century. The poem contains Inferno, Purgatorio, and Paradiso. The Inferno is a description of the nine circles of torment that are found on the earth. It depicts the realms of the people that have gone against the spiritual values and who, instead, have chosen bestial appetite, violence, or fraud and malice. The nine circles of hell are limbo, lust, gluttony, greed and wrath. Others are heresy, violence, fraud, and treachery. The purpose of this paper is to examine the Dante’s Inferno in the perspective of its portrayal of God’s image and the justification of hell. 

In this epic poem, God is portrayed as a super being guilty of multiple weaknesses including being egotistic, unjust, and hypocritical. Dante, in this poem, depicts God as being more human than divine by challenging God’s omnipotence. Additionally, the manner in which Dante describes Hell is in full contradiction to the morals of God as written in the Bible. When god arranges Hell to flatter Himself, He commits egotism, a sin that is common among human beings (Cheney, 2016). The weakness is depicted in Limbo and on the Gate of Hell where, for instance, God sends those who do not worship Him to Hell. This implies that failure to worship Him is a sin.

God is also depicted as lacking justice in His actions thus removing the godly image. The injustice is portrayed by the manner in which the sodomites and opportunists are treated. The opportunists are subjected to banner chasing in their lives after death followed by being stung by insects and maggots. They are known to having done neither good nor bad during their lifetimes and, therefore, justice could have demanded that they be granted a neutral punishment having lived a neutral life. The sodomites are also punished unfairly by God when Brunetto Lattini is condemned to hell despite being a good leader (Babor, T. F., McGovern, T., & Robaina, K. (2017). While he commited sodomy, God chooses to ignore all the other good deeds that Brunetto did.

Finally, God is also portrayed as being hypocritical in His actions, a sin that further diminishes His godliness and makes Him more human. A case in point is when God condemns the sin of egotism and goes ahead to commit it repeatedly. Proverbs 29:23 states that “arrogance will bring your downfall, but if you are humble, you will be respected.” When Slattery condemns Dante’s human state as being weak, doubtful, and limited, he is proving God’s hypocrisy because He is also human (Verdicchio, 2015). The actions of God in Hell as portrayed by Dante are inconsistent with the Biblical literature. Both Dante and God are prone to making mistakes, something common among human beings thus making God more human.

To wrap it up, Dante portrays God is more human since He commits the same sins that humans commit: egotism, hypocrisy, and injustice. Hell is justified as being a destination for victims of the mistakes committed by God. The Hell is presented as being a totally different place as compared to what is written about it in the Bible. As a result, reading through the text gives an image of God who is prone to the very mistakes common to humans thus ripping Him off His lofty status of divine and, instead, making Him a mere human. Whether or not Dante did it intentionally is subject to debate but one thing is clear in the poem: the misconstrued notion of God is revealed to future generations.

 

References

Babor, T. F., McGovern, T., & Robaina, K. (2017). Dante’s inferno: Seven deadly sins in scientific publishing and how to avoid them. Addiction Science: A Guide for the Perplexed, 267.

Cheney, L. D. G. (2016). Illustrations for Dante’s Inferno: A Comparative Study of Sandro Botticelli, Giovanni Stradano, and Federico Zuccaro. Cultural and Religious Studies4(8), 487.

Verdicchio, M. (2015). Irony and Desire in Dante’s” Inferno” 27. Italica, 285-297.

Sample Solution

Answer: The yield-to-call, also known as YTC, is the rate of return that investors can expect to receive if they buy a callable bond and it gets called prior to maturity. To calculate the YTC at this point in time, we need to first determine the present value of all cash flows that will occur up until 5 years from issuance (when the bond could be called). This includes coupon payments, principal repayment upon call date and any capital gains or losses due to changes in market interest rates.

Sample Solution

Answer: The yield-to-call, also known as YTC, is the rate of return that investors can expect to receive if they buy a callable bond and it gets called prior to maturity. To calculate the YTC at this point in time, we need to first determine the present value of all cash flows that will occur up until 5 years from issuance (when the bond could be called). This includes coupon payments, principal repayment upon call date and any capital gains or losses due to changes in market interest rates.

We begin by calculating the present value of each future cash flow associated with this bond. For example, for each semi-annual coupon payment occurring over five years would have an adjusted discount rate of 4% (=8%/2) and therefore generate a present value $95.46 per 100 par [(100*0.08)/(1+0.04)^n], where n=number of periods till cash flow occurs (e.g., 10 semi-annual payments = 20 periods). Additionally, there is also a principal repayment amount at 5th year which has an adjusted discount rate of 0%, resulting in a present value $101 per 100 par [(100*1)/(1+0)^n] since 1/1 = 1 for any number raised by power 0 . Then finally ,the capital gain/loss on initial investment due change market interest rates needs taken account calculate current price which 97 per 100 par thus PV of these two factors add together comes out be 845 92 .

Now ,we can use this information along with price paid initially i e 97 per 100 par compute yield call using following formula : Yield Call = ((Coupons + Principal Repayment )-(Price Paid))/(Price Paid*Number Years Till Maturity ),where Coupons = 95 46 ; Principal Repayment 101 ; Price Paid 97 ; Number Years Till Maturity 5 ie Yield Call = ((95 46 + 101)-97)/(97*5)=3 87 % . Therefore calculated yield call this particular semi annual fixed coupon callable bond 3 87 %

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