Consider the case of BTR Co.:

BTR Co. has 9% annual coupon bonds that are callable and have 18 years left until maturity. The bonds have a par value of $1,000, and their current market price is $950.35. However, BTR Co. may call the bonds in eight years at a call price of $1,060. What are the YTM and the yield to call (YTC) on BTR Co.s bonds?

Value:

YTM= a.)9.35% b.)7.36% c.)9.59% d.)7.83%

YTC= a.)10.46% b.)8.88% c.)8.24% d.)9.35%

If interest rates are expected to remain constant, what is the best estimate of the remaining life left for BTR Co.s bonds?

a. 8 yr

b. 10 yr

c. 18 yr

d. 13 yr

If BTR Co. issued new bonds today, what coupon rate must the bonds have to be issued at par?

a.8.24%

b.9.59%

c.9.35%

d.8.88%