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Consider a bond with a 5% annual coupon and 10 years to maturity. The bond pays quarterly coupons. The current price of the bond is

Consider a bond with a 5% annual coupon and 10 years to maturity. The bond pays quarterly coupons. The current price of the bond is $115 and its par value is $100. The bond is callable at the end of year 3. The call premium (i.e. the percent increase over the bond's face value which is paid by the issuing company to exercise their call option) is equal to 10%. Calculate the yield-to-worst of this bond. (Hint: You need to calculate the yield-to-maturity and the yield-to-call.

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