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Lloyd Corporation's 14 percent coupon rate, semiannual payment, $1,000 par value bonds, which mature in 30 years, are callable 5 years from now at a
Lloyd Corporation's 14 percent coupon rate, semiannual payment, $1,000 par value bonds, which mature in 30 years, are callable 5 years from now at a price of $1,050. The bonds sell at a price of $1,353.54, and the yield curve is flat. Assuming that interest rates in the economy are expected to remain at the current level, what is the best estimate of Lloyd's nominal interest rate on new bonds?
I calculated the YTM=10.2% and YTC=8.86%, but which is the best estimate nominal interest rate on new bonds? I need word explanation.
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