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Suppose that you are considering buying a $1,000 face value bond with an annual coupon...

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Suppose that you are considering buying a $1,000 face value bond with an annual coupon rate of 10%, a maturity of three years and a price of $1,079. a) Calculate the current yield of the bond b) Calculate the Yield to maturity c) Why is it important to consider both yield calculations when making investment decisions? Why aren't the two yields always the same? d) Now assume that this original bond is callable in two years and carries a call premium of $1025. What is the Yield-to-Call for this bond? e) Under what economic conditions would a company execute this call option? Why would an investor purchase this callable bond

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