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P-18. Kempton Enterprises has bonds outstanding with a $1,000 face value and 10 years left until maturity. They have an 11% annual coupon payment, and

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P-18. Kempton Enterprises has bonds outstanding with a $1,000 face value and 10 years left until maturity. They have an 11% annual coupon payment, and their current price is $1,185. The bonds may be called in 5 years at 109% of face value (Call price = $1,090). 1. What is the yield to maturity? 2.What is the yield to call if they are called in 5 years? 3. Which yield might investors expect to earn on these bonds? Why

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