McCue Inc
Subject:FinancePrice: Bought3
McCue Inc.’s bonds currently sell for $1,270. They pay a $70 annual coupon, have a 14-year maturity and a $1,000 par value, but they can be called in 5 years at $1,070. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels into the future. What is the difference between this bond’s YTM and its YTC?
