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It is now January 1, 2002, and you are considering the purchase of an outstanding Racette Corporation bond that was issued on January 1, 2000.

It is now January 1, 2002, and you are considering the purchase of an outstanding Racette Corporation bond that was issued on January 1, 2000. The Racetta bond has a 9.5 percent coupon paid quarterly and a 30-year original maturity. Interest rates have declined since the bond was issued and the bond is now selling at $1,165.75. What is the yield to maturity? If you bought the bond which rate do you think you would earn? If the bond has a call provision call price of $1,075 with a call period of 5 years from the origin. What is the yield to call?

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