A seven-year, $1,000 par bond has an 8% annual coupon and is currently yielding 7.5%. The bond

Question:

A seven-year, $1,000 par bond has an 8% annual and is currently yielding 7.5%. The bond can be called in two years at a call price of $1,010. What is the bond yielding, assuming it will be called (known as the yield to call)?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...