A 475 Percent Coupon Bond with 12 Years Left to Maturity

A 4.75 percent coupon bond with 12 years left to maturity can be called in two years. The call premium is one year of coupon payments. It is offered for sale at $1037.35. What is the yield to call of the bond? (Assume that interest payments are paid semiannually and par value is $1,000.)

A) 4.60 percent
B) 4.68 percent
C) 4.75 percent
D) 5.05 percent

Correct Answer:

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