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Click here to read the eBook: Bond Yields YIELD TO CALL Seven years ago the Templeton Company issued 18-year bonds with an 11% annual coupon rate at their $1,000 par value. bonds had an 5% call premium, with 5 years one protection. Today Templeton called the bonds. a. Compute the realzed rate of return for an investor who purchased the bond s when they were issued and held them until they were called. Round your answer to two decimal places. b. Why the investor should or should not be happy that Templeton called them. . Since the bonds have been called, interest rates must have risen the YTC is greater than the YTM. If investors wish to reinvest their interest they can now do so at higher interest rates 1T. Since the bonds have been called, interest rates must have risen sufficiently such that the YTC is greater than the YIM. If investors wish to r reinvest their interest receipts, they must do so at lower interest rates. I. Since the bonds have been called, investors will receive a call premium and can declare a capital IV. Since the bonds have been called, investors will no longer need to consider resinivestment rate rish V. Since the bonds have been called, interest rates must t gain on ther tax returns ave fallen sufficiently such that the YTC is less than the YTM. If investors wish to reinvest their interest recnpts they mast do so at lower interest rates

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