Final answer :
The bond's yield to call which is paid quarterly is calculated as 9.35
How to calculate yield to call in business?
The number of potential consumers who are most likely to call after seeing your advertisement is termed as the yield to call. It’s usually calculated by dividing the number of impressions (the number of times your ad was viewed) by the number of calls.
Explanation :
We will estimate the implied yield by using the bond pricing formula. Bond pricing is expressed mathematically as follows:
Price [tex]= (C1-(1+r)-nr)+FV(1+r)n[/tex]
Here:
C is the coupon payment per period
r is the rate per period
n is the number of periods
FV is the face value of the bond
Substituting the values ;
[tex]$ 1120.00= $25.001-(1+r)-20r+$1000(1+r)20r=0.023387[/tex]
Annualized yield [tex]= 0.0233874 = 9.35%[/tex]
Therefore, [tex]9.35%[/tex] is the yield to call.
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