A 65 Percent Coupon Bond with 12 Years Left to Maturity

A 6.5 percent coupon bond with 12 years left to maturity can be called in four years. The call premium is one year of coupon payments. It is offered for sale at $1,190.25. What is the yield to call of the bond? (Assume interest payments are paid semiannually and par value is $1,000.)

A) 1.48 percent
B) 2.96 percent
C) 6.5 percent
D) 7.23 percent

Correct Answer:

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