Yield to call on a bond with a coupon rate of 6% paid semi-annually, 5 years to maturity, a par value of $1,000 and a selling price of $1,125, callable after 5 years at $1,050 is

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The yield to call (YTC) is calculated based on the bond's call price rather than its maturity value if the bond is callable before maturity. However, since this bond is callable at 5 years, the same as its maturity period, and at a call price of $1,050, which is different from its selling price of $1,125, the YTC calculation is relevant. The YTC calculation considers the bond's coupon payments, the time until the call date, the call price, and the current market price. Given the information, the correct YTC is 4.12%, which accounts for the semi-annual interest payments, the premium over par value at which the bond is callable, and the current selling price above both par and call price.

Yield to Call on a Bond with a Coupon Rate