Yield To Maturity and To Call
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Yield to maturity: A firm's bonds have a maturity of 10 years with a $1,000 face value, and a 8 percent semiannual coupon, are callable in 5 years at $1,050, and currently sell at a price of $ 1,100. What are their yield to maturity and their yield to call? What return should investors expect to earn on this bond?
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Solution Summary
Using an Excel spreadsheet, this solution illustrates how to compute the yield to maturity and the yield to call on a callable bond.
Solution Preview
The yield to maturity of a debt instrument is the rate which equalizes its purchase price (present value) with the periodic interest payments (an ...
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