Yield to Maturity and Yield to Call Arnot International's bonds have a current market price of $1,250. The bonds have a 10% annual coupon payment, a $1,000 face value, and 10 yatar left uniil mazuizky. The bonds may be called in 5 years at 109% of face value (call price =$1,090 ). a. What is the yield to maturity? Round your answer to two decimal places. \% b. What is the yield to cail if they are called in 5 years? Round your answer to two decimal places. c. Which yield might investors expect to earn on these bonds, and why? I. Investors would not expect the bonds to be called and to earn the YTM because the YTM is less than the YTC. II. Investors would expect the bonds to be called and to earn the YTC because the YTC is less than the YTM. III. Investors would expect the bonds to be called and to eam the YTC because the YTM is less than the YTC. IV. Investors would not expect the bonds to be called and to earn the YTM because the YTM is greater than the YTC. d. 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 5 . In Year 5 , they may on called at 109% of face value, but in each of the next 4 yeaes the call percentage will decline by 1 percentage point. Thus, in year 6 they may be called at 106 of face value, in Year 7 they may be called at 107% of face value, and so on. If the yieid curve is horizontal and interest rates remain at their curtent leve, when is the latest that investors might expect the firm to call the bonds