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Problem:

An 8% coupon municipal bond has 15 years left to maturity and has a price quote of 98.5. The bond can be called in 6 years. The call premium is one year of coupon payments.

Required:

Question: Compute the bond's yield to call and determine if the bond will be called. Assume interest payments are paid semi-annually and a par value of $5,000.

Note: Please show how you came up with the solution.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M91162926

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