What is the yield-to-call


Problem

A coupon bond pays annual interest, has a par value of $1,000, matures in 10 years, has a coupon rate of 5% and has a yield to maturity of 8%. Suppose the bond is embedded with a call provision, and your purchase price is $831.97. One year later, the bond is called by the issuer at $1020 due to the good interest rate. What is the Yield-to-Call?

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Finance Basics: What is the yield-to-call
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