Problem:
A 6.75% coupon bond with 13 years left to maturity can be called in 2 years. The call premium is one year of coupon payments. It is offered for sale at $919.75.
Required:
Question: What is the yield to call of the bond? Assume interest payments are paid semiannually.
- 12.14%
- 7.27%
- 14.54%
- 8.29%
Note: Please show the work not just the answer.