Last year Carson Industries issued a 10-year, 14% semiannual coupon bond at its par value of $1,000. Currently, the bond

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answerhappygod
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Last year Carson Industries issued a 10-year, 14% semiannual coupon bond at its par value of $1,000. Currently, the bond

Post by answerhappygod »

Last year Carson Industries issued a 10-year, 14% semiannual
coupon bond at its par value of $1,000. Currently, the bond can be
called in 6 years at a price of $1,060 and it sells for $1,300.
YTM: %
YTC: %
Would an investor be more likely to earn the YTM or the YTC?
-Select-Since the YTM is above the YTC, the bond is likely to be
called.Since the YTC is above the YTM, the bond is likely to be
called.Since the YTM is above the YTC, the bond is not likely to be
called.Since the YTC is above the YTM, the bond is not likely to be
called.Since the coupon rate on the bond has declined, the bond is
not likely to be called.Item 3
%
Is this yield affected by whether the bond is likely to be
called?
%
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