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A 2.50% municipal bond has 12 years left to maturity and has a price quote of 98.45. The bond can be called in four years.
A 2.50% municipal bond has 12 years left to maturity and has a price quote of 98.45. The bond can be called in four years. The call premium is one year of coupon payments. Compute mnd discuss the bond's current yield, yield to maturity, taxable equivalent yield (for an investor in the 35 percent marginal tax bracket), and yield to call. (Assume interest payments are semiannual and it has a par value of $5,000)
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