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    Calculate YTC and YTM for a 20 year coupon bond

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    What are the YTC and YTM for a 20-year, 8% Semiannual coupon bond selling for $1,225, which can be called in 5 years for $1,085? What is the effective YTC? Would you expect to earn YTM or YTC on this bond and why? Also, show the formula and entries on a financial calculator.

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    Solution Preview

    In a calculator:
    Number of periods = 20*2 =40
    Future value = 1000
    semiannual payment = 1000*8% / 2 = 40
    present value ...

    Solution Summary

    In a series of calculations, the response shows the formulas and the answers.