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Profitability with exercise of the early repayment clause

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Reference no: EM133111765

Gamma has just issued a five-year bond with an early redemption clause (early redemption price equal to par). The coupon rate is 7%. Early redemption will be possible on each coupon detachment date. The bond is currently trading at 105% of its $ 100 face value. What is the profitability at maturity of this bond (Yield to Maturity - YTM)? As well as profitability with exercise of the early repayment clause (Yield to Call - YTC)?

Reference no: EM133111765

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