Breenan Industries has a bond outstanding with 10 years to maturity, a 7% nominal coupon, semiannual payments, and a $1,000 par value. The bond has a 4% nominal yield to maturity, but it can be called in 6 years at a price of $1,100.
a/ What is the bond’s nominal yield to call?
b/ Will the firm call the bond? Whether investors should expect to receive YTM or YTC? Explain.
Please show all your work clearly for both (a) and (b).