Question

- The bonds of ABC Inc are currently selling for $1,250. The
annual coupon payment of these bonds is $90. The bonds have a par
value of $1,000 and a maturity period of 25-years; however, they
are callable in 5 years at the call price of $1,050.Assume that no
additional costs are incurred and that a yield curve is horizontal.
- Calculate the difference between the bond's YTM and its YTC?
- Who gets the benefit from callable bonds?

Answer #1

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