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Marco Verratti's bonds currently sell for $1,175.89 with par value of $1,000.00. The bonds pay 13.00 percent coupon rate and have a 17-year maturity, but they can be called in 6 years at $1,097.00. There are no costs but the call premium and refund the bonds. In addition, assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. What is the bonds’ yield to maturity? What is the bonds’ yield to call?

Financial Management, Finance

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