Find the yield on coupon equivalent basis

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Problem A. Consider a 30-year U.S. corporate bond paying 7 percent coupon. The bond has 20 years left to maturity and is currently priced at $970. The bond is callable in 6 years at a 8 percent call premium. If an investor can reinvest the call price at the prevailing market interest rate of 8 percent at the call date, what is his yield?

Problem B. Consider a 90-day Treasury bill selling for $960? Find the yield on coupon equivalent basis (investment yield)

Reference no: EM132696289

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