Yield to Call A 6.75 percent coupon bond with 26 years left to maturity can be called in 6 years. The call premium is one year of coupon payments. It is offered for sale at $1,135.25. What yield to call of the bond? (Assume that interest payments are paid semi-annually.)

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Yield to Call A 6.75 percent coupon bond with 26 years left to maturity can be called in 6 years. The call premium is one year of coupon payments. It is offered for sale at $1,135.25.  What yield to call of the bond? (Assume that interest payments are paid semi-annually.)

 

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N=12, PV=-1135.25, PMT=33.75, FV=1067.50   CPT I = 2.541%, YTC = 2.541% × 2 = 5.08%

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