A bond with five years remaining until maturity is currently trading for 101 per 100 of par
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A bond with five years remaining until maturity is currently trading for 101 per 100 of par value. The bond offers a 6% coupon rate with interest paid semiannually. The bond is first callable in three years and is callable after that date on coupon dates according to the following schedule:
The bond’s annual yield-to-maturity is closest to:
A. 2.88%.
B. 5.77%.
C. 5.94%.
Transcribed Image Text:
End of Year 3 4 5 Call Price 102 101 100
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The answer is C 594 To calculate the yieldtomaturity YTM of a callable bond we need to consider the ...View the full answer
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