The bonds of Bexar Corp. have a 9% coupon and mature in 17 years. They are callable
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Question:
The bonds of Bexar Corp. have a 9% coupon and mature in 17 years. They are callable in 3 years at $1,025. Interest is paid annually. The bonds are trading in the bond market at $985. The yield-to-maturity is 10.36%. The YTM means
| if you buy the bond today and hold it until it is called, your compound annual return will be 9% |
| if you buy the bond today and hold it until it is called, your compound annual return will be 10.36% |
| if you buy the bond today and hold it until maturity, your compound annual return will be 9% |
| if you buy the bond today and hold it until maturity, your compound annual return will be 10.36% |
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