Question: 2. Yield-to-Call (4 points Numbers, Functions and 2.5 words) A company issues a callable bond with the falling features: ' T96 coupon rate Semiannual coupon

2. Yield-to-Call (4 points Numbers, Functions and 2.5 words) A company issues a callable bond with the falling features: ' T96 coupon rate Semiannual coupon payments $1,000 face value Matures in 15 years The bond may be called after 3 years. Call premium: If the bond is called anytime during the 2years period beginning 3 years from today and ending 5 years from today, the company will pay a face value of $1,250 instead of $1,000. Compute the yield an investor will earn buying the bond today for $1,233.10 if it is called in exactly 3 years and one day from today (the first day is it eligible to be called)

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