McCue Inc.'s bonds currently sell for $1,250. They pay a $120 quarterly coupon, have a 15.5 semesters maturity, and a $1,000 par value, but they can be called in 5.25 years at $1,050. What ís the difference between this bond's YTM and its YTC?

McCue Inc.'s bonds currently sell for $1,250. They pay a $120 quarterly coupon, have a 15.5 semesters maturity, and a $1,000 par value, but they can be called in 5.25 years at $1,050. What ís the difference between this bond's YTM and its YTC?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

McCue Inc's bonds currently sell for $1,25O.
They pay a $120 quarterly coupon, have a
15.5 semesters maturity, and a $1,000 par
value, but they can be called in 5.25 years at
$1,050. What is the difference between this
bond's YTM and its YTC?

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