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A 7 - year callable bond has a coupon rate of 6 % ( paid semi - annually ) . The total term of the

A 7-year callable bond has a coupon rate of 6%(paid semi-annually). The total term of the
bond is 7 years but the bond is callable in 3 years with a prepayment penalty of 1 year's coupon
interest (two semi-annual payments). The bond dealer tells you that the price on this bond is
102.50. Calculate your approximate Yield to Call (YTC) and your approximate YTM.
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