A 55 Percent Corporate Coupon Bond Is Callable in Four Years

question 109

Multiple Choice

A 5.5 percent corporate coupon bond is callable in four years for a call premium of one year of coupon payments. Assuming a par value of $1,000, what is the price paid to the bondholder if the issuer calls the bond? (Assume annual interest payments.)

• A) $55
• B) $220
• C) $1,000
• D) $1,055

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