Calculate YTC using a financial calculator by entering the number of payment periods until call for $N,$ the price of the bond for PV$,$ the interest payments for PMT$,$ and the call price for FV$.$ Then you can solve for I$/$YR $=$ YTC$.$ Again, remember you need to make the appropriate adjustments for a semiannual bond and realize that the calculated I$/$YR is on a periodic basis so you will need to multiply the rate by $2$ to obtain the annual rate. In addition, you need to make sure that the signs for PMT and FV are identical and the opposite sign is used for PV; otherwise, your answer will be incorrect.

A company is more likely to call its bonds if they are able to replace their current high$-$coupon debt with less expensive financing. A bond is more likely to be called if its price is par$-$because this means that the going market interest rate is less than its coupon rate.

Quantitative Problem: Ace Products has a bond issue outstanding with $15$ years remaining to maturity, a coupon rate of $9\%$ with semiannual payments of $$45,$ and a par value of $$1,000.$ The price of each bond in the issue is $$1,180\mathrm{.}00.$ The bond issue is callable in $5$ years at a call price of $$1,090.$

What is the bond's current yield? Do not round intermediate calculations, Round your answer to two decimal places.

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What is the bond's nominal annual yield to maturity $($YTM$)?$ Do not round intermedlate calculations. Round your answer to two decimal places.

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What is the bond's nominal annual yield to call $($YTC$)?$ Do not round intermediate calculations. Round your answer to two decimal places.

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Assuming interest rates remain at current levels, will the bond issue be called?

The firm $-$select$-$ call the bond.