with a $1,000 face value and 10 years left payment, and their current price is $1,185. The bonds Hll face value (Call price s1,090) a. What is the yield to maturity? 7-18 YIELD TO MATURITY AND of c Which yield might investors expect to earn on these bonds? Why? d. The bond's indenture indicates that the call provision gives the firm the right to call wiyheayeby What is the yield to call if they are called in 5 years? b. 100% of face value, but in each of the next 4 years, the call percentage wirmay be Thus, tr 1 end of each year beginning in Year 5. In Year 5, the bonds us in Year 6, they may be called at 108% of face value: in Year 7, then 107% of face value, and so forth. lf the bonds at the tal and interest rates re it t the firm to call the bondyo rve is horizonta when is the latest that investors might expect the firm to ca current level, when is the latest that investors might hensive/Spreadsheet Problem BOND VALUATION Clifford Clark is a recent retiree who is interested in inves his savings in corporate bonds. His financial planner has suggested the foll 7-19 Bond Ahas a 7% annual coupon, matures in 12 years, and has a $1,000 face . Bond B has a 9% annual coupon, matures in 12 years, and has a si,000 face value. . Bond C has an 11% annual coupon, matures in 12 years, and has a $1,000faceval Each bond has a yield to maturity of 9%. a. Before calculating the prices of the bonds, indicate whether each bond is trading at premium, at a discount, or at par b. Calculate the price of each of the three bonds. c. Calculate the current yield for each of the three bonds. (Hint: Refer to footnote 7 fo definition of the current yield and to Table 7.1.) If the yield to maturity for each bond remains at 9%, what will be 1 year from now? What is the expected capital gains yield for each bond? What is the expected total return for each bond? 7 for the the price of each bond d