Problem:

Arnot International's bonds have a current market price of $1,350. 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? Round your answer to two decimal places.

Question 2: What is the yield to call, if they are called in 5 years? Round your answer to two decimal places.

Note: Provide support for your rationale.