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    Luther Industries

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    1. Luther Industries has just issued a callable (at 102) ten-year, 8% coupon bond with semi-annual coupon payments. The bond can be called at 102 in three years or anytime thereafter on a coupon payment date. It has a current price of 99.

    a. What is the Yield to Maturity (YTM) on this bond?
    b. What is the Yield to Call (YTC) on this bond?

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    https://brainmass.com/business/bond-valuation/ytm-ytc-bond-270259

    Solution Preview

    1. Luther Industries has just issued a callable (at 102) ten-year, 8% coupon bond with semi-annual coupon payments. The bond can be called at 102 in three years or anytime thereafter on a coupon payment date. It has a current price of 99.

    a. What is the Yield to Maturity (YTM) on this bond?

    where B is the issued price/current price
    ...

    Solution Summary

    This solution is comprised of a detailed explanation of how to determine the Yield to Maturity (YTM) and a Yield to Call (YTC) of a given bond.

    $2.19