Question

A 7-year, $1,000 pair bond has an 8% annual coupon with a yield to maturity of...

A 7-year, $1,000 pair bond has an 8% annual coupon with a yield to maturity of 7.5%. Coupons are paid semiannually. This bond can be called in 2 years at a call price of $1,010. Assuming that the bond will be called, calculate the yield to call.

Question options:

1)

 7.018% (THIS OPTION IS WRONG)

2)

 7.218%

3)

 3.506%

4)

 7.012%

5)

 7.791%

6)

 None of the above

OPTION 1 IS WRONG

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