Q No 6: Last year Clark Company issued a 10-year, 12 percent annual coupon bond at its par value of $1,000. The bond can be called in 4 years at a price of $1,060, and it now sells for $1,100.

1. What are the bonds yield to maturity and its yield to call? Would an investor be more likely to actually earn the YTM or the YTC?
2. What is the current yield? Is this yield affected by whether or not the bond is likely to be called?
3. What is the expected capital gains (or loss) yield for the coming year? Is this yield dependent on whether or not the bond is expected to be called?
4. An 8 percent annual coupon bond matures in 5 years. The bond has a face value of $1,000 and a current yield of 8.21 percent. What are the bonds price and YTM? (Remember capital gain is calculated from = (YTM-Current Yield)