A Corporate Bond Matures in 14 Years

A corporate bond matures in 14 years. The bond has an 8 percent semiannual coupon and a par value of $1,000. The bond is callable in five years at a call price of $1,050. The price of the bond today is $1,075. What are the bond's yield to maturity and yield to call?

A) YTM = 14.29%; YTC = 14.09%
B) YTM = 3.57%; YTC = 3.52%
C) YTM = 7.14%; YTC = 7.34%
D) YTM = 6.64%; YTC = 4.78%
E) YTM = 7.14%; YTC = 7.05%

Correct Answer:

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