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YTM vs. YTC It is now January 1, 2020 and you are considering the purchase of an outstanding bond that was issued on January 1,

YTM vs. YTC

It is now January 1, 2020 and you are considering the purchase of an outstanding bond that was issued on January 1, 2017. It has a 7.25% annual coupon and had a 20-year original maturity. (It matures on December 31, 2036.) There is 5 years of call protection (until December 31, 2021), after which time it can be called at 107.5 - that is, at 107.5% of par, or $1,075. Interest rates have declined since it was issued, and it is now selling at 113.1% of par, or $1,131.00.

1. What is the yield to maturity (YTM)?

2. What is the yield to call (YTC)?

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