Assume that same bond is callable in 4 years with a call, Financial Management

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Assume that same bond is callable in 4 years with a call

1) A 9 year, 8% semi annual bond is selling for $1052.32. Calculate the bonds YTM.

2) Assume that same bond is callable in 4 years with a call premium of $70. Calculate the bonds YTC.

3) Say you buy the bond for $1052.32, but you plan to hold it for 3 years only. Using the term structure on interest rates, you estimate the YTM on the bond when you sell it to be 6.84%. Calculate what you expect your realized yield will be for the 3 year period.

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Financial Management: Assume that same bond is callable in 4 years with a call

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Financial Management: Assume that same bond is callable in 4 years with a call

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