1. Consider again the American Telephone & Telegraph 81⁄8 percent debentures that mature on July 15, 2024. Determine the yield to call if the bonds are called on July 15, 2010 at $1,016.55.
2. American Telephone & Telegraph has bonds that trade frequently, pay a 7.75% coupon rate, and mature in 2009. The bonds mature on March 1 in the maturity year. Suppose an investor buys this bond on March 1, 2004, and assumes interest is paid annually on March 1. Calculate the yield to maturity assuming the investor buys the bond at the following price, as quoted in the financial press:
a. 100
b. 90
c. 105