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QUESTION

A 10-year, 12% semiannual coupon bond with a par value of $1,000 may be called in 4 years at a call price of $1, 060. The bond sells for $1,100....

A 10-year, 12% semiannual coupon bond with a par value of $1,000 may be called in 4 years at a call price of $1, 060. The bond sells for $1,100. (Assume that the bond has just been issued)a. What is the bond's yield to maturity?b. What is the bond's current yield?c. What is the bond's capital gain or loss yield?d. What is the bond's yield to call?

a)The bonds yield to maturity is the interest rate at which you would discount the cash flows to getthe present value of the bond.Semi-annual coupon payments = 0.12 / 2 * 1000 = $60IRR for...
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