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You own a $1000 face value 7% annual coupon bond that has 10 years until maturity but can be called in 5 years at a
You own a $1000 face value 7% annual coupon bond that has 10 years until maturity but can be called in 5 years at a call price of $1050. If both the yield to maturity and yield to call are 6%, how much more is the bond worth to you if vou believe it will be called versus held to maturity?
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