No marks given if financial calculator appropriate keys are not mentioned where required.

Question 1:

The $1,000 face value corporate bond has a coupon rate of 6%, with interest paid annually, and matures in 8 years. The bond can be called in 4 years. The call premium $60. a) If the bond's yield to maturity (YTM) is 5%, what is the bond's value today? b) What is the bonds yield to call (YTC)? (Hint: use bond's value today from part (a)). Also, calculate call price. Call price = call premium + par value)

c) Would an investor be more likely to earn the YTM or the YTC? Explain.