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Suppose that you purchase a bond that sells for 98% of par, is $1000 par, has an annual coupon rate of 6.5 %, pays coupon
Suppose that you purchase a bond that sells for 98% of par, is $1000 par, has an annual coupon rate of 6.5 %, pays coupon payments semiannually, has 25 years remaining to maturity, and is callable in 5 years at a 5% premium. What is the yield to maturity for this bond? Draw a time line to illustrate the bond's payouts if held until maturity and write a mathematical equation for the valuation of the bond if held to maturity What is the yield to call for this bond (see question #1)? Draw a time line to illustrate the bond's payouts if held until the first possible date the bond can be called and write a mathematical equation for the valuation of the bond if held to the first possible date the bond can be called
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