SIE practice questionhardYield to Call
A 20-year bond is callable after 10 years. If interest rates fall and the bond is called at year 10, which yield will the investor most likely realize?
- ACurrent yield
- BYield to call✓ Correct answer
- CYield to maturity
- DCoupon rate
Explanation
Why B — Yield to call
If a bond is called, the investor earns the yield to call (YTC) as the bond is repaid early. Yield to maturity assumes holding until maturity; current yield and coupon rate ignore call features.
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