Computation of bonds yield to maturity and yield to call

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Reference no: EM1314620

Computation of bonds yield to maturity and yield to call on bonds

Kaufman Enterprises has bonds outstanding with a $1000 face value and 10 years left until maturity. They have an 11% annual coupon payment and their current price is $1175. The bonds may be called in 5 years at 109% of face value (call price:$1090).

a) What is the yiels to maturity?

b) What is the yield to call, if they are called in 5 years?

c) Which yield might investors expect to earn on these bonds, and why?

Reference no: EM1314620

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