# Kempton Enterprises has bonds outstanding with a \$1,000 face value and 10 years left until maturity. They have an 11% annual coupon payment, and their current price is \$1,175. The bonds may be called in 5 years at 109% of face value (Call price = \$1,090).What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.  %What is the yield to call if they are called in 5 years? Do not round intermediate calculations. Round your answer to two decimal places.  %

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Kempton Enterprises has bonds outstanding with a \$1,000 face value and 10 years left until maturity. They have an 11% annual coupon payment, and their current price is \$1,175. The bonds may be called in 5 years at 109% of face value (Call price = \$1,090).

1. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.

%

2. What is the yield to call if they are called in 5 years? Do not round intermediate calculations. Round your answer to two decimal places.

%

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Calculate the yield to maturity as follows:

MS-Excel --> Formulas --> Financials --> Rate Therefore, the yield to maturity is 8.35%.

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