A$($n$)11\mathrm{.}0\%,20-$year bond has a par value of$$ $$1,000$ and a call price of $$$$1,075.($The bond's first call date is in $5$ years.$)$ Coupon payments are made semiannually$($so use semiannual compounding where$$ appropriate$).$

a$.$ Find the current$$ yield, YTM$,$ and YTC on this$$ issue, given that it is currently being priced in the market at $$1,200.$ Which of these $3$ yields is the$$ highest? Which is the$$ lowest? Which yield would you use to value this$$ bond? Explain.

b$.$ Repeat the $3$ calculations$$ above, given that the bond is being priced at $$$$850.$ Now which yield is the$$ highest? Which is the$$ lowest? Which yield would you use to value this$$ bond? Explain.

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Part $1$

a$.$ If the bond is priced at $$$$1,200,$ the current yield is $\_\_\%.($Round to two decimal$$ places.$)$

Part $2$

The annual$$ yield$-$to$-$maturity with semiannual compounding is$\_\_\%.($Round to two decimal$$ places.$)$

Part $3$

The annual$$ yield$-$to$-$call with semiannual compounding is$\_\_\%.($Round to two decimal$$ places.$)$

Part $4$

Which of these $3$ yields is the$$ highest? Which is the$$ lowest?$$

Current yield is the$$ highest, while yield$-$to$-$call is the lowest. IS THIS RIGHT??

Part $5$

Which yield would you use to value this$$ bond?$($Select the best answer$$ below.$)$

A$.$The$$ yield$-$to$-$maturity is always used.

B$.$The$$ yield$-$to$-$call because convention is to use the lower more conservative measure of yield.

C$.$It$$ doesn't matter which yield you use.

D$.$The$$ yield$-$to$-$maturity because the bonds may not be called.

Part $6$

b$.$ If the bond is priced at $$$$850$ the current yield is $\_\_\%.($Round to two decimal$$ places.$)$

Part $7$

$-$The annual$$ yield$-$to$-$maturity with semiannual compounding is$\_\_\%.($Round to two decimal$$ places.$)$

Part $8$

$-$The annual$$ yield$-$to$-$call with semiannual compounding is $\_\_\%.($Round to two decimal$$ places.$)$

$-$Which of these $3$ yields is the$$ highest? Which is the$$ lowest?$($Select from the$$ drop$-$down menus.$)$

Yield$-$to$-$call is the$$ highest, while current yield is the lowest. IS THIS RIGHT???

Part $10$

Which yield would you use to value this$$ bond?$($Select the best answer$$ below.$)$

A$.$The$$ yield$-$to$-$maturity because convention is to use the lower of$$ yield$-$to$-$maturity or$$ yield$-$to$-$call for bonds selling at a discount.

B$.$The$$ yield$-$to$-$maturity because the bonds may not be called.

C$.$It$$ doesn't matter which yield you use.

D$.$The$$ yield$-$to$-$maturity is always used.