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Probable realized yield on the bond

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Reference no: EM133305758

Question

The YTC is a more reasonable investor expectation for the probable realized yield on the bond, because the prevailing market interest rate of 4% on the bonds is well below the 5.5% coupon rate on the outstanding bonds. Therefore, the company will likely exercise its right to call the bonds, and re-finance with lower cost debt.

Reference no: EM133305758

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