If the market price of a bond is less than the call price, yield to call is a reasonable calculation for yield.

Question

Quizplus · Accepted Answer

In the case where market interest rates are much lower than the coupon, there is always the chance the company will call the bond. Because of this possibility, the call price often serves as an upper price limit, and further reductions in market interest rates will not cause this callable bond to increase in price. In other words, investors' capital gain potentials may be quite limited with bonds subject to a call.

If the Market Price of a Bond Is Less Than