Question
Suppose a 10-year, 10 percent, semiannual coupon bond with a par value of $1,000 is currently selling for $1,135.90, producing a nominal yield to maturity
Suppose a 10-year, 10 percent, semiannual coupon bond with a par value of $1,000 is currently selling for $1,135.90, producing a nominal yield to maturity of 8 percent. However, the bond can be called after 5 years for a price of $1,050.
a. What is the bond's nominal yield to call (YTC)?
b. If you bought this bond, do you think you would be more likely to earn the YTM or the YTC? Why?
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Personal Finance
Authors: Jeff Madura
7th Edition
0134989961, 978-0134989969
