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Two years ago a corporation issued semi-annual bonds with a 20-year term to maturity, but added a call feature that allows them to call the

  1. Two years ago a corporation issued semi-annual bonds with a 20-year term to maturity, but added a call feature that allows them to call the bonds with a $50 call premium in only 10 years. The bonds were issued with a coupon rate of 8.6% and have a current Yield to Maturity of 6.3%. Ignoring the call feature, what would be the appropriate price for this bond? If we assume the bond is currently selling for this price, what would be its Yield to Call?

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