Problem:
Today is January 1, 2012 and you are considering purchasing an outstanding bond that was issued on January 1, 2010. It has a 9% annual coupon and originally had a 20-year maturity.The bonds can be called for 5 years from original issue date at a premium of $1085. Interest rates have declined and the bonds are currently selling for 112% of par.
Required:
Question: Calculate the YTM and the YTC.
Note: Please provide reasons to support your answer.