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A 4.15% coupon bond with 23 years left to maturity can be called in 14 years....

A 4.15% coupon bond with 23 years left to maturity can be called in 14 years. The call premium is one-half   year of coupon payments. It is currently offered for sale at $1,085.35. What is the yield to call of the bond? (Assume interest payments are semiannual; round and display your answer to 2 decimal places i.e. 1.23)

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Answer #1

Yield to call is calculated using the RATE function:-

=RATE(nper,pmt,pv,fv)

=RATE(14*2,4.15%/2*1000,-1085.35,1000+20.75)*2

=3.49%

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