McGriff Motors Has Bonds Outstanding Which Will Mature in 12

McGriff Motors has bonds outstanding which will mature in 12 years. The bonds pay a 12 percent semiannual coupon and have a face value of $1,000 (i.e., the bonds pay a $60 coupon every six months) . The bonds currently have a yield to maturity of 10 percent. The bonds are callable in 8 years and have a call price of $1,050. What are the bonds' yield to call?

A) 8.89%
B) 9.89%
C) 9.94%
D) 10.00%
E) 12.00%

Correct Answer:

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