Yield to call for bonds


Problem:

Alex plans to purchase a callable bond of Horizon Inc. The bond is 20-year to maturity, carry 13.5% annual coupon, paid semi-annually, and have a$1,000 par value. The bond is selling now for $1,287 each. The bond can be called back in 7 years at a call price $1,067.5.

Required:

Question: What is the yield to call for these bonds?

Note: Can someone please give me a step by step solution?

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Finance Basics: Yield to call for bonds
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