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Jones Corp's bonds currently sell for $1,150. They have a 6.75% annual coupon rate and a 15 year maturity, but they can be called in
Jones Corp's bonds currently sell for $1,150. They have a 6.75% annual coupon rate and a 15 year maturity, but they can be called in 6 years at $1,067.50. Assume that no cost other than the call premium would be incurred to call and refund the bonds, also assume the yield curve is horizontal, with rates expected to remain at current levels on into the future. Under these conditions what rate of retturn should an investor expect to earn if he or she purchases these bonds, the YTC or the YTM
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