Four years ago your firm issued 1000 par 25-year bonds with


Four years ago, your firm issued $1,000 par, 25-year bonds, with a 7 percent coupon rate and a 10 percent call premium. a. If these bonds are now called, what is the approximate yield to call for the investors who originally purchased them? b. If these bonds are now called, what is the actual yield to call for the investors who originally purchased them at par? c. If the current interest rate on the bond is 5 percent and the bonds were not callable, at what price would each bond sell?

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Financial Management: Four years ago your firm issued 1000 par 25-year bonds with
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