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Annasam Corporation recently issued 10-yer bonds. the bonds have a coupon rate of 6% and pay interest semiannually. Also the bonds are callable in 4 years at a call price equal to 105% of par value. The par value of the bonds is $1000. If the yield to maturity is 9% what is the yield to call? (2 part problem using PV and rate)

A. 13.45%

B. 8.33%

C. 10.20%

D. 14.08%

This question was answered on Jun 24, 2016.Purchase Solution @ 29.44 USD
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Answer: Option - A Yield to call assumes that the bonds are called at the call price after the call protection end or after a certain period. Number of semi-annual periods till the bond will be called= 4*2 = 8 Coupon = $30 Call price = $1050 Par value = $1000 Semi-annual yield = 9/2 = 4

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