Problem:
Arnot International's bonds have a current market price of $1,300. The bonds have an 12% annual coupon payment, a $1,000 face value, and 10 years left until maturity. The bonds may be called in 5 years at 109% of face value (Call price = $1,090).
Required:
Question 1: What is the yield to maturity?
Question 2: What is the yield to call, if they are called in 5 years? Explain in detail and provide explanation.