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Consider the following case of Blue Moose Home Builders Inc.: Blue Moose Home Builders Inc. has 9 % annual coupon bonds that are callable and
Consider the following case of Blue Moose Home Builders Inc.:
Blue Moose Home Builders Inc. has annual coupon bonds that are callable and have years left until maturity. The bonds have a par value of $ and their current market price is $ However, Blue Moose Home Builders Inc. may call the bonds in eight years at a call price of $
Blue Moose Home Builders Inc.s bonds have a yieldtomaturity YTM of and a yieldtocall YTC of
If interest rates are expected to remain constant, what is the best estimate of the remaining life left for Blue Moose Home Builders Inc.s bonds?
years
years
years
years
If Blue Moose Home Builders Inc. issued new bonds today, what coupon rate must the bonds have to be issued at par?
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