Problem:
Five years ago your firm issued a $1,000 par, 20-year bonds with a 6% coupon rate and an 8% call premium. The price of these bonds now is $1103.80. Assume annual compounding.
Required:
Question 1: Calculate the yield to maturity of these bonds today.
Question 2: If these bonds are now called, what is the actual yield to call for the investors who originally purchased them?
Note: Explain all calculation and formulas.