What is the bonds nominal yield to maturity

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Last year Clark Co. issued a 15-year, 12 percent semiannual coupon bond at its par value of $1,000. The bond can be called in 4 years at a price of $1,060. Now the bond sells for $975.

a. What is the bond's nominal yield to maturity? What is its nominal yield to call?

b. If the market interest rate stays the same in the near future, would an investor be more likely to actually earn the YTM or the YTC? Explain your answer. (hint: the YTM obtained in part (a) indicates the current market interest rate)

c. Suppose the bond has been selling at a premium rather than at a discount. Would the YTM then have been the most likely actual return, or would the YTC have been most likely? Explain your answer.

Reference no: EM131967894

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