Question: Question 3 a. Nestle has just issued a callable (at par) six-year, 7.5% coupon bond with annual coupon payments. The bond can be called at

Question 3 a. Nestle has just issued a callable (at par)

Question 3 a. Nestle has just issued a callable (at par) six-year, 7.5% coupon bond with annual coupon payments. The bond can be called at par in one year or anytime thereafter on a coupon payment date. It has a price of $105 per $100 face value, implying a yield to maturity of 6.47%. What is the bond's yield to call? (10 marks) b. When would an issuer redeem a callable bond? (10 marks)

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