Suppose the 20-year, 7% annual coupon bond in question 14 had a call option giving the issuer
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Suppose the 20-year, 7% annual coupon bond in question 14 had a call option giving the issuer the right to buy the bond back after five years at a call price of
$1,000. Given the bond is priced at $901.82, estimate its yield to call using the yield approximation formula (average rate to call, ARTC) approach.
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Baiju T
I am working as an Associate Professor in the Department of Mathematics, Manipal Institute of Technology (MIT), Manipal University, Karnataka, India since July 2010. I have 17 years of teaching experience. I started my career as Lecturer in mathematics in May 2002. I am teaching Engineering Mathematics courses for the undergraduate programs (B.Tech) and postgraduate programs (M.Tech./ M.Sc. / MCA) and also teaching the course Operations Research for MBA programme.
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