Fincorp issues two bonds with $20-$year maturities. Both bonds are callable at $$1,050.$ The first bond is issued at a deep discount with a coupon rate of $4\%$ and a price of $$580$ to yield $8\mathrm{.}4\%.$ The second bond is issued at par value with a coupon rate of $8\mathrm{.}75\%.$ a$.$ What is the yield to maturity of the par bond? Why is it higher than the yield of the discount bond?

b$.$ If you expect rates to fall substantially in the next two years, which bond would you prefer to hold?

c$.$ In what sense does the discount bond offer "implicit call protection"?