Question: Question 11 5 points Save Ans It is now January 1, 2021, and Tyler Marks is considering the purchase of an outstanding bond that was
Question 11 5 points Save Ans It is now January 1, 2021, and Tyler Marks is considering the purchase of an outstanding bond that was issued on January 1, 2016. The bond has a 25-year original maturity and a 12 percent annual coupon (paid semiannually). The band has call protection for 15 years (Until January 1, 2031), after which the bond can be called for 106 percent of par (or $1,060). Interest rates have increased since the bond was issued, so the bond is now selling at $940. Which of the following statements is most CORRECT? The yield to call is 13.41 percent and the yield to maturity uu 12.84 percent. Since the YTC is greater than the YTM, the band will O probably not be called. The yield to maturity is 6.42 percent, so if rates stay the same for the next 10 years, the bond will probably be called once the call ob protection expires The yield to maturity is 12.84 percent. If rates on new bonds of this type decrease by 3 percent ten years from now, the bond will probably be called The yield to call is 6.70 percent, so if rates do not change in the next 10 years, the bond will probably not be called None of these answer options is correct Od
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