Yield to Call

CFA Level I Fixed Income
#1

Can someone please explain to me the concept of why a Yield to Call is calculated on Premium bonds?

If the bond is trading at a Premium, why would the YTC be less than the YTM? Schweser also says that if the bond were trading at a Discount, there would be no reason to calculate the YTC, why is this?

Please help me on the conceptual side of YTC; I know how to calculate it, just not how to interpret it.

Thanks!

#2

Here’s quite a discussion on this very point:

http://www.analystforum.com/forums/cfa-forums/cfa-level-i-forum/91325393

#3

yes we have discussed a lot on the link provided above.