Yield to maturity & the Yield to call
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A bond with 25 years to maturity and 5 years to call sells for $964.50 and has an annual coupon rate of 11%. The bond will pay a call premium of one extra year's interest. The bond pays coupons semiannually.
Calculate the yield to maturity.
Calculate the yield to call.
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Solution Summary
The solution explains how to calculate the yield to maturity and yield to call on bond.
Solution Preview
The yield to maturity is the discounting rate that would make the present value of interest and principal equal to the price today. In the same way, the yield to call is the discounting rate that would make the ...
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