In the ection on the yield to call, a bond pays annual interest of $80 and matures after ten years. The bond is valued at $1.147 if the comparable rate is 6% and the bond is help to maturity. If, however, an investor expects the bond to be called for $1,050 after five years, the value of the bond would be $1,122. Investor A expect the bond to be called and Investor B expects the bond not to be called. Investor A sells the bond to Investor B for $1,122.
What is the annual return earned by B is the bond is not called? Why is this yield greater than the 6% earned on comparable securities?