Timon & PumbaCorp has just issued bonds that have 10 years to maturity and pay 7% coupons twice a year. Each bond has a $1,000 par value. It is believed that the yield to maturity on these bonds is 9%.

a. Calculate the current price of this bond (2 points)

b. Using the price from part (a), calculate the current yield (2 points)

c. Suppose that there is a call provision. Each bond can be called at the price of $1050. What is the yield to call in this case? (2 points)

d. You realized that the market price is actually $825. What is the yield to maturity in this case? (2 points)