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BCC has issued 8 1/8 percent debentures that will mature in July 15, 2030. Assume that interest paid is paid and compounded annually. If an
BCC has issued 8 1/8 percent debentures that will mature in July 15, 2030. Assume that interest paid is paid and compounded annually. If an investor purchased $1,000 denomination bond for $1025 on July 15, 2010, determine the bonds yield to maturity. Explain why an investor would be willing to pay $1025 for a bond that is going to be worth only $1000 at maturity. Part B Consider again the BCC 8 1/8 percent debentures that mature on July 15, 2030 (see problem 6). Determine the yield to call if the bonds are called on July 15, 2016, at $1015.55
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