Katy's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000 par value. The bond has a 6.50% yield to maturity, but it can be called in 6 years at a price of $1,050. What is the bond's yield to call?

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 8MC: Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for...
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Please solve this question general accounting

Katy's bonds have 15 years to maturity, an 8.75% coupon paid
semiannually, and a $1,000 par value. The bond has a 6.50%
yield to maturity, but it can be called in 6 years at a price of
$1,050.
What is the bond's yield to call?
Transcribed Image Text:Katy's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000 par value. The bond has a 6.50% yield to maturity, but it can be called in 6 years at a price of $1,050. What is the bond's yield to call?
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