Mastermind International's bonds have a current market price of $$1,300.$ The bonds have a $15\%$ annual coupon payment, a $$1,000$

face value, and $10$ years left until maturity. The bonds may be called in $5$ years at $109\%$ of face value $($call price $=$$$1,090).$

a$)$ What is the yield to maturity?

b$)$ What is the yield to call if the bonds are called in $5$ years?

c$)$ Between YTM and YTC$,$ which yield might investors expect to earn on these bonds?

The bond's indenture indicates that the call provision gives the firm the right to call them at the end of each year beginning in Year

In Year $5,$ they may be called at $109\%$ of face value, but in each of the next $4$ years the call percentage will decline by $1$

percentage point. Thus, in Year $6$ they may be called at $108\%$ of face value, in Year $7$ they may be called at $107\%$ of face value, and

so on$.$

d$)$ If the yield curve is horizontal and interest rates remain at their current level, when is the latest that investors would expect

the firm to call the bonds?