Problem:
On November 1, 2009 you purchased two callable bonds with 6 years remaining to maturity at the time of purchase and 3 years to remaining to call. The coupon interest rate of both bonds is 10% and par value is $1,000. The first bond pays annual coupon and the second - semi-annual. At the time you purchased the bond, the annual-coupon bond had the price of 1,092.50 and the semi-annual bond had price of 1,085.
You sold both bonds on November 1, 2010, right after receiving the coupon payments. At this time the annual bond's yield has become 7% and the semi-annual's bond price changed to 7.2%.
Q1. What was the yield to maturity for both bonds on November 1, 2009?
Q2. What was the yield to call for both bonds on November 1, 2009?
Q3. At what price did you sell each bond on November 1, 2010?
Q4. What was your holding period return for each bond? Assume coupon reinvestment at 10% annual return