Question: answer using an hp10b calculator 9. It is now January 1,2016 , and you are considering the purchase of an outstanding bond that was issued
9. It is now January 1,2016 , and you are considering the purchase of an outstanding bond that was issued on January 1,2014. It has an 8% annual coupon and had a 30-year original maturity. (It matures on December 31,2043 .) There is 5 years of call protection (until December 31,2018), after which time it can be called at 108 that is, at 108% of par, or $1,080. Interest rates have declined since it was issued, and it is now selling at 119.12% of par, or $1,191.20. a. What is the yicld to maturity? What is the yield to call? b. If you bought this bond, which return would you actually carn? c. Suppose the bond had been selling at a discount rather than a premium. Would the YTM have been the most likely return, or the YTC
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