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A 8 % coupon rate, callable bond currently sells for $ 1 1 0 5 and has 1 2 years to maturity. The bond can

8 %

coupon rate, callable bond currently sells for $

1105

and has

12

years to maturity. The bond can be called in

4

years for $

1050 .

The current discount rate for bonds of this type is

6.7 % .

What return can a new buyer of this bond expect to earn? Answer is

12.5 %

how do i get?

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To determine the yield to maturity YTM of the callable bond we can apply the standard formula for no... blur-text-image

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