A 30-year maturity, 8% coupon bond paying coupons semiannually is callable in five years at a call

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A 30-year maturity, 8% coupon bond paying coupons semiannually is callable in five years at a call price of $1,100. The bond currently sells at a yield to maturity of 7% (3.5% per half-year).

a. What is the yield to call?

b. What is the yield to call if the call price is only $1,050?

c. What is the yield to call if the call price is $1,100 but the bond can be called in two years instead of five years?

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Investments

ISBN: 9781259277177

11th Edition

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

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