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Alliance Health Plans issued a 12 percent annual coupon bond a few years ago. The bond now sells for $1,100. The bond has a call

Alliance Health Plans issued a 12 percent annual coupon bond a few years ago. The bond now sells for $1,100. The bond has a call provision that allows Alliance Health Plans to call the bond in four years at a call price of $1,060. The par value of the bond is $1,000.

  1. What is the bonds yield to maturity? Assume that the bond is held to maturity 10 years from now.
  2. What is the bonds yield to call? Yield to call refers to the return a bondholder receives if the security is held until the call date, prior to the instruments date of maturity. Assume that the bond is held to the call date 4 years from now.

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