Considering the purchase of outstanding bond

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It is now January 1, 2018 and you are considering the purchase of an outstanding bond that was issued on January 1, 2016. It has an 8.5% annual coupon and had a 20-year original maturity. (It matures on December 31, 2035.) There is 5 years of call protection (until December 31, 2018), after which time it can be called at 106 - that is, at 106%. of par, or $1060.00. Interest rates have declined since it was issued, and it is now selling at 118.06% of par, or $1,180.60.

What is the yield to call?

Reference no: EM132070139

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