a. What is boud indenture? Explain the difference between the yield to maturity and the yield to call ?

b. What are the two ways a sinking fund can be handled? Which method will be chosen by the firm if interest rates have risen? If interest rates have fallen?

c. ACT's bonds have a current market price of $1,200. The bonds have an 11% annual coupon payment, $1,000 face value, and 10 years left until maturity. The bonds may be called in 5 years at 109% of face value call price 1,000

What is the yield to maturity?

What is the yield to call if they are called in years? Which yield might investors expect to earn on these bonds, and why?