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Consider the following bond: a 20-years $1,000 callable bond with 5 years until the next call date. The call price (the price the firm will
Consider the following bond: a 20-years $1,000 callable bond with 5 years until the next call date. The call price (the price the firm will need to pay bondholders if it uses its option to call the bond) on the bond is $1,050. The bond pays yearly coupons at a rate of 8% and the yield on the bond is 6%. Calculate the yield to call on this bond.
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