In 2006, BCC issued 8 percent debentures that will mature on December 1, 2046. a. If an

In 2006, BCC issued 8⅝ percent debentures that will mature on December 1, 2046.
a. If an investor purchased one of these bonds ($1,000 denomination) on December 1, 2016, for $1,050, determine the yield-to-maturity. Explain why investors would be willing to pay $1,050 on December 1, 2016, for one of these bonds when they are going to receive only $1,000 when the bond matures in 2046.
b. The BCC 8⅝ percent debentures are callable by the company on December 1, 2021, at $1,044.50. Determine the yield to call as of December 1, 2016, assuming that BCC calls the bonds on that date.