The Z Corporation issues a $10 %, 20$-year bond at a time when yields are $10 %$.
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The Z Corporation issues a $10 %, 20$-year bond at a time when yields are $10 %$. The bond has a call provision that allows the corporation to force a bond holder to redeem his or her bond at face value plus $5 %$. After 5 years the corporation finds that exercise of this call provision is advantageous. What can you deduce about the yield at that time? (Assume one coupon payment per year.)
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