Last year Carson Industries issued a 10-year, 12% semiannualcoupon bond at its par value of $1,000. Currently, the bond can becalled in 6 years at a price of $1,060 and it sells for $1,150.

1. What is the bond's nominal yield to maturity? Do not roundintermediate calculations. Round your answer to two decimalplaces.
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   What is the bond's nominal yield to call? Do not round intermediatecalculations. Round your answer to two decimal places.
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   Would an investor be more likely to earn the YTM or the YTC?
   -Select-Since the YTC is above the YTM, the bond is not likely tobe called.Since the coupon rate on the bond has declined, the bondis not likely to be called.Since the YTM is above the YTC, the bondis likely to be called.Since the YTC is above the YTM, the bond islikely to be called.Since the YTM is above the YTC, the bond is notlikely to be called.Item 3
   
2. What is the current yield? (Hint: Refer to Footnote 7 for thedefinition of the current yield and to Table 7.1.) Round youranswer to two decimal places.
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   Is this yield affected by whether the bond is likely to be called?
   1. If the bond is called, the current yield and the capital gainsyield will both be different.
   2. If the bond is called, the current yield and the capital gainsyield will remain the same but the coupon rate will bedifferent.
   3. If the bond is called, the current yield will remain the samebut the capital gains yield will be different.
   4. If the bond is called, the current yield and the capital gainsyield will remain the same.
   5. If the bond is called, the capital gains yield will remain thesame but the current yield will be different.
   
   -Select-IIIIIIIVVItem 5
   
3. What is the expected capital gains (or loss) yield for thecoming year? Use amounts calculated in above requirements forcalcuation, if reqired. Round your answer to two decimal places.Enter a loss percentage, if any, with a minus sign.
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   Is this yield dependent on whether the bond is expected to becalled?
   1. If the bond is expected to be called, the appropriate expectedtotal return will not change.
   2. The expected capital gains (or loss) yield for the coming yeardepends on whether or not the bond is expected to be called.
   3. The expected capital gains (or loss) yield for the coming yeardoes not depend on whether or not the bond is expected to becalled.
   4. If the bond is expected to be called, the appropriate expectedtotal return is the YTM.
   5. If the bond is not expected to be called, the appropriateexpected total return is the YTC.