Question: A 7 - year callable bond has a coupon rate of 5 % ( paid semi - annually ) . The total term of the

A 7-year callable bond has a coupon rate of 5%(paid semi-annually). The total term of the bond is 7 years but the bond is callable in 3 years with a prepayment penalty of 1 years coupon interest (two semi-annual payments). The bond dealer tells you that the price on this bond is 102.50. Calculate your approximate Yield to Call (YTC) and your approximate YTM.
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