Bibb Falk recently purchased a bond with a $1,000 face value, a 10% coupon rate, and four

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Bibb Falk recently purchased a bond with a $1,000 face value, a 10% coupon rate, and four years to maturity. The bond makes annual interest payments, the first to be received one year from today. Bibb paid $1,032.40 for the bond.
a. What is the bond's yield-to-maturity?
b. If the bond can be called two years from now at a price of $1,100, what is its yield-to-call?
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...
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Fundamentals of Investments

ISBN: 978-0132926171

3rd edition

Authors: Gordon J. Alexander, William F. Sharpe, Jeffery V. Bailey

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