Cempton Enterprises has bonds outstanding with a $1,000 face value and 10 years ieft until maturity. They huve a 10% annual coupen payment, and their current price is $1,170. The bonds mar be called in $ years at 109 s of foce value (Calf price =31,090). a. What is the yield to maturity? Do not round internediate calculations, fround your answer to two decimal places. 6. What is the yeld to cail if they are called in 5 years? bo not rovind intermedate catcutations. fround your answer to fwo decimal places. Which velit might investors expet to earn on these bonds? Why? 1 Investan would not expect the bonds to be called and to earn the YTM because the YTM is greater than the VIC. 11. Inverten would not erpect the bonds to be calied and to earn the YTM because the YTM is iess than the YTC. I1. Imentars would eapect the bonds to be cilled and to earn the YTC becovie the YTC is iess than the YTM. IV. Invertors would expect the bonds to be called and to earn the ric because the yTC is greater then the YTM. d. The bonds indenture indicates that the call provision gives the firm the right to call the ponds at the end of each year beginning in Year 5. In Year 5, the bonds may be calied at 109% of face whus, but in each of the next 4 years, the call percentage nill dectine by 1%. Thus, in Year 6 , they may be caled ot 100% of face value; in Year 7 , ther may be to cat the bondos Do not round intermediate dalaviotion. in ree