Is the realized yield higher or lower than promised yield

Reference no: EM13255988

Seven years ago, Goodwynn & Wolf Incorporated sold a 20-year bond issue with a 14% annual coupon rate, 14% yield to maturity, and a 2% call premium. Today, G&W called the bonds. The bonds originally were sold at their face value of $1,000. Compute the realized rate of return for investors who purchased the bonds when they were issued and who surrender them today in exchange for the call price. Is the realized yield higher or lower than the promised yield?

Reference no: EM13255988

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