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Q5. 10 points in total Part I: All else equal, should the YTM of a callable bond be greater than, equal to, or less than
Q5. 10 points in total Part I: All else equal, should the YTM of a callable bond be greater than, equal to, or less than that of a non-callable bond? Explain. [5 points] Part II: Explain what a premium bond is Suppose the YTM of a premium bond is constant, discuss what will happen to the current yield and capital gain yield of this premium bond over time. [5 points]
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