What is the annually compounded yield to maturity

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Reference no: EM131047647

Suppose you own a ten year bond that pays 5% annually with a two year call that is currently trading for $95. After maturity, the bond can be called for $105.

a) What is the annually compounded yield to maturity?

b) What is the annually compounded yield to call?

For the following two parts, assume you can reinvest all of your cashflows during the 10 year period at a 3% APR.

c) On an annual basis, what is the total return for a ten year time horizon if the bond is called in year 2?

d) What is the total return on a ten year time horizon (on an annual basis) if the bond is not called?

Reference no: EM131047647

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