medium · Debt Capital Markets pricing-yields-curve
For a callable bond trading at a significant discount (e.g., at 88.00 with a par call), why is the Yield to Maturity (YTM) generally used instead of the Yield to Call (YTC)?
- Because the YTM will be higher than the YTC in this scenario.
- Because YTM is the standard for all bonds regardless of price.
- Because the issuer is highly likely to call the bond to pay off the debt early.
- Because the call is economically 'out-of-the-money' for the issuer.
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