kmf229

If the market price (premium) is currently higher than the call price, it is advantageous for the issuer to purchase the bonds back at the lower call price. Therefore, the bond will likely not make it to maturity, the coupons will not be received after the bond is called, and the yield to call will be less than the yield if held until maturity. If trading at a discount, the call price is currently higher than market price, and if the issuer wanted to purchase that debt back they would just do so in open markets at the current market price. I disagree with the fact that there is no need to calculate the yield to call. Just because it is trading at a discount today doesn’t mean that it will be tomorrow.