Cables Ltd bonds will mature in 10 years. The bonds have a face value of $1000 and a 6 %coupon rate, paid semiannually. The price of bond is $970 and are callable in 4 years at $1070 or onwards with call price declining by $10 each year assuming other things constant.

1. When will it be least costly for the firm to call the bond? Give numerical justification.
2. As you know, Corporations generally issued following two types of bonds:
   1. Fixed coupon rate
   2. Floating coupon rate

If you have to choose for investment in one of aforesaid types of bonds, which type of bond would you prefer under current interest and risk scenario of Pakistan? (Assuming that the other characteristics of both bonds are same i.e. maturity, yield, price & risk etc).