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A 5% Coupon Bond Has 10 Years to Maturity and Could

Question 115

Multiple Choice

A 5% coupon bond has 10 years to maturity and could be called in 2 years. If the bond is called, investors will earn 6.2%. The call premium is one year of coupon payments. If coupon payments are made semi-annually and par value is $1,000, what is the bond's yield to maturity?


A) 2.36%
B) 4.72%
C) 5.18%
D) 6.49%

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