A corporate bond matures in 14 years.  The bond has an 8% semiannual coupon and a par value of $1,000.  The bond is callable in five years at a call price of $1,050. The price of the bond today is $1,075.  What are the bond’s yield to maturity and yield to call?

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 12P: Bond Yields and Rates of Return A 10-year, 12% semiannual coupon bond with a par value of 1,000 may...
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A corporate bond matures in 14 years.  The bond has an 8% semiannual coupon and a par value of $1,000.  The bond is callable in five years at a call price of $1,050. The price of the bond today is $1,075.  What are the bond’s yield to maturity and yield to call?

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