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The price of a 2 0 year, 1 2 % bond is 8 7 5 . There is an option, and the firm may purchase

The price of a

20

year,

12 %

bond is

875 .

There is an option, and the firm may purchase the bond back in

5

years at par plus one year's interest. derive the yield to maturity and the yield to call.

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