What is the bonds yield to maturity

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Question:

7 Regal Health Plans issued a 12 percent annual coupon bond with a $1,000 par value a few years ago. The bond now has ten years remaining to maturity and sells for $1,100. The bond has a call provision that allows Regal to call the bond in four years at a call price of $1,060.

a. What is the bond's yield to maturity?

b. What is the bond's yield to call?

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The paper is about the details of what will be the yield to maturity and yield to call in each scenario. First part of the solution talks about bond’s yield to maturity when years to maturity remains 10 years and what all data are given for calculation of bond’s yield to maturity. Here we are discussing about a health firm who has issued 12 percent coupon bonds with a par of $1,000 and now has 10 years left to maturity what will an investor will at the end of 10 years as YTM is the discount rate which future sum of principal and interest payments will equal the price of a bond.

Reference no: EM131229774

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