Determine the Yield-To-Call (To the Nearest 0

question 45

Multiple Choice

Determine the yield-to-call (to the nearest 0.1 of a percent) of an LTV bond with a 14 percent coupon, that pays interest semiannually. The bond can be called in 7 years, has a call premium of $140, and is currently selling for $1,154.

• A) 12.0%
• B) 16.2%
• C) 13.7%
• D) 14%

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Definitions:

Cost of Goods Sold

Represents the direct costs attributable to the production of the goods sold by a company.

Average Cost Formula

A method used in accounting to calculate the cost of goods sold and ending inventory by averaging the cost of goods available for sale.

Perpetual Inventory System

An inventory management system that continuously updates the quantity and value of inventory on hand after each transaction.