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1. A corporate bond is sold in primary market with 15 years to maturity, a 7.00 percent coupon rate paid annually, and is callable at

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1. A corporate bond is sold in primary market with 15 years to maturity, a 7.00 percent coupon rate paid annually, and is callable at year 10 with a $1.50 call premium per $100 of par value. Henry buys the corporate bond with 9 years remaining to maturity at a price of $102.00 per $100 of par value. a. When Henry buys the bond, what is the bond's current yield? Explain your answer. b. Assume the bond WILL be called and complete the time line for Henry's bond. Your time line must show only numbers unless it is an unknown variable in which case you can show it as a question mark (?). 0 1 2 ---- c. When Henry buys the bond, what is the bond's yield to call? Explain your answer. d. Now assume the bond WILL NOT be called and complete the time line for Henry's bond. Your time line must show only numbers unless it is an unknown variable in which case you can show it as a question mark (?). 0 1 2 ...... e. When Henry buys the bond, what is the bond's yield to maturity? Explain your answer. f. Does the coupon rate, current yield, yield to maturity, or yield to call most accurately reflect the yield Joe will earn on the bond? Explain your

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