SIE practice questionhardYield Calculations - YTC
A 20-year 6% bond is callable in 10 years at 105 and is trading at 108. Which yield is the lowest?
- AYield to maturity
- BYield to call✓ Correct answer
- CCurrent yield
- DCoupon rate
Explanation
Why B — Yield to call
At a premium, yield to call is lowest because the premium is lost sooner. YTM is higher with a longer holding period; current yield and coupon are both higher figures.
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