Fixed Income Question following, discount, current, someone, trouble

ShooterMcCFA

Hi All,
I am having a little trouble understanding the following points (from Schweser):
1) “For bonds trading at a premium to par, the yield to call may be less than the yield to maturity. This can occur when the call price is below the current market price.”
2) “If the bond was trading at a discount to par value, there would be no reason to calculate the yield to call”
Why is this? Can someone please help.
Many thanks,

kmf229

If the market price (premium) is currently higher than the call price, it is advantageous for the issuer to purchase the bonds back at the lower call price. Therefore, the bond will likely not make it to maturity, the coupons will not be received after the bond is called, and the yield to call will be less than the yield if held until maturity. If trading at a discount, the call price is currently higher than market price, and if the issuer wanted to purchase that debt back they would just do so in open markets at the current market price. I disagree with the fact that there is no need to calculate the yield to call. Just because it is trading at a discount today doesn’t mean that it will be tomorrow.

ramdabom

Could you please also explain the similar rationale behind:
Yield to put will likely be higher than the YTM if the bond is selling at a discount.
Many thanks,