A 65 Percent Coupon Bond with 12 Years Left to Maturity

question 34

Multiple Choice

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

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Definitions:

Combative

Displaying readiness or eagerness to fight or argue; aggressively confrontational.

Agreeableness

One of the five major personality traits, reflecting individual differences in cooperation, compassion, and social harmony.

Caring

Displaying kindness and concern for others.

Introversion

A personality trait marked by a focus on internal thoughts and feelings rather than seeking external stimulation.