Question 1 -- / 2 McCue Inc.'s bonds currently sell for $1,200. They pay a $90 annual coupon, have a 25-year maturity, and a $1,000 par value, but they can be called in 5 years at $1,050. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. What is the difference between this bond's YTM and its YTC? (Subtract the YTC from the YTM; it is possible to get a negative answer.) 1 2.00% 2 2.10% 3 2.46% 4 1.78% 5 1.50% Question 2 -- / 2 Kebt Corporation's Class Semi bonds have a 12-year maturity and an 10.75% coupon paid semiannually (5.375% each 6 months), and those bonds sell at their $1,000 par value. The firm's Class Ann bonds have the same risk, maturity, nominal interest rate, and par value, but these bonds pay interest annually. Neither bond is callable. At what price should the annual payment bond sell? 1 $971.47 2) $1,197.16 3 $932.21 4 $981.28 5 $1,020.53