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QUESTION

The price of a semiannual 10-year bond is $923. Its coupon rate is 4%. The bond can be called in three years for $1,050.Calculate the YTCNOM and YTCEFFThe price of a semiannual 10-year bond is $923. I

The price of a semiannual 10-year bond is $923. Its coupon rate is 4%. The bond can be called in three years for $1,050.

Calculate the YTCNOM and YTCEFF

The price of a semiannual 10-year bond is $923. Its coupon rate is 4%. The bond can be called in three years for $1,050.

Calculate the YTCNOM and YTCEFF

The price of a semiannual 10-year bond is $923. Its coupon rate is 4%. The bond can be called in three years for $1,050.

Calculate the YTCNOM and YTCEFF

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****** price ********* ***** =$1050Semi ****** interest ****** *** *1/2 =$20Number ** ******* ** **** ** years ** ** *********** price * ****** ***** * ****** ** periods to **** *********** /6 ******* =$2117Call ***** * ****** ***** ** *********** /2 ************ ** **** (Semi ******* * ****** Interest + ****** price - market ***** ******** pf ******* ** ***** ******* ***** + ****** ************** ** **** ***** ****** ) * *** * ***** ******* =$4117/$98650=417%YTCNOM = ***** ** call annual ***** ****** ***** to **** *2 ******* *********** =Effective ***** ** call * ******* ****** ***** ** ***** ** -1 =(10417)^2 ** =10851 -1 ****** *****

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