Consider the following situations about callable stocks and bonds:

a) There is a callable 12%, 15 year bond which is callable at 104 par in 5 years. If the market price is $950, what is the YTC and the YTM? Which is most likely that we, the investor, will make?

b) We have a callable preferred stock, which pays a dividend of $12 per annum and is callable at 106 par in 7 years. Derive its yield (required rate of return), if its price is $98.

c) There is a callable preferred stock at 110 par in 9 years, paying $4 annually and having a yield of 6%. Compute its price, if it is called. In case the issuing firm decides to not call it, what would its price be?