medium · Debt Capital Markets
An analyst is comparing two premium bonds. Bond A has a single call date. Bond B has three call dates with a step-down schedule.
Which statement is true regarding the YTW calculation?
- Bond B requires four separate yield calculations (3 calls + maturity) to identify the YTW.
- Bond B will always have a lower YTW than Bond A because it has more call options.
- Bond A is safer because YTW is easier to calculate.
- Bond B is quoted as an average of its three yield-to-call figures.
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