Yield to Call parts a,b, and c

3 Financial Assets What are the bond's nominal yield to maturity and its nominal vi investor be more likely to earn the YTM or the YTC? nominal yield to call? Would ac? r the bond is a. tobe called? (Hint: Refer to Footnote 7 for the definition of the current yield a ikely to r the coming year? Is this b. Wh at is the current yield? Is this yield affected by whether the b t yield and to Tu be dependent on whether the bond is expected to be called? of outstanding bond that was issued on January 1, 2009 It has a 9.5% annual co a 30-year original maturity. (It matures on December 31, 2038.) There is5e 12YIELD TO CALL It is now January 1, 2011, and you are considering the pur an on a had sued; and it is now sell ears of cal protection (until December 31, 2013), after which time it can be called at 109- 109% is, at of par, or $1,090. Interest rates have declined since it was i at 116.575% of par, or $1,165.75. What is the yield to maturity? What is the yield to call? a. b. If you bought this bond, which return would you actually eam? Explain your reasoning. Suppose the bond had been selling at a discount rather than a premium. Would the yield to maturity have been the most likely return, or would the yield to call have been most likely? c. PRICE AND YIELD An 8% semiannual coupon bond matures in 5 years. The bond has a face value of $1,000 and a current yield of 8.21%. What are the bond,sprice and YTM? (Hint Refer to Footnote 7 for the definition of the current yield and to Table 7.1.)