8.30 Rachette Corp. issued 20-year bonds five years ago. These bonds, which pay semiannual coupons, have a coupon rate of 9.735 percent and a yield to maturity of 7.95 percent.

a. Compute the bonds current price.

b. If the bonds can be called after five more years at a premium of 13.5 percent over par value, what is the investors realized yield?

c. If you bought the bond today, what is your expected rate of return? Explain.