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Question 2 (8 points) Thatcher Corporation's bonds will mature in 10 years. It can be callable in 6 years with 290 calling premium (ie., callable
Question 2 (8 points) Thatcher Corporation's bonds will mature in 10 years. It can be callable in 6 years with 290 calling premium (ie., callable at 102% of face value). The bonds have a face value of $1,000 and an 8% coupon rate, paid semiannually. The price of the bonds today is $1,100. Remember that the yields on the semiannual payment coupon bonds are quoted as APR with the semiannual compounding assumption (a) (2 points) What is the yield to maturity (YTM) of the bond? (b) (2 points) What is the yield to call (YTC) of the bond? (c) (2 point) If the bond is priced at par in 6 years from today, will the bond be called? Why or why not? (d) (2 point) If the bond yield is 7.5% on the callable date (i.e., 6 years from today), will the bond be called? Why or why not
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