A 725 Percent Coupon Bond with 25 Years Left to Maturity

A 7.25 percent coupon bond with 25 years left to maturity can be called in five years. The call premium is one year of coupon payments. It is offered for sale at $1,066.24. What is the yield to call of the bond? (Assume that interest payments are paid semiannually and par value is $1,000.)

A) 3.41 percent
B) 3.45 percent
C) 3.51 percent
D) 6.90 percent

Correct Answer:

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