Consider $7-$year bonds with a coupon of $8\mathrm{.}375$ percent and are currently worth $$1,063\mathrm{.}49.$ The bonds can be called in three years at price of $$1,075.$

a$.$What is the yield to maturity of these bonds? What is the effective annual yield?

b$.$What is the realized yield on the bonds if they are called?

c$.$If you plan to invest in one of these bonds today, what is the expected yield on the investment? Explain.

d$.$ if the market yield increases to $10\%$ how much will you lose if you sell the bonds? How much would be your loss due to price$-$risk if you hold it until maturity?

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