A Company Issues a Callable (At Par) 20-Year, 5% Coupon

question 31

Multiple Choice

A company issues a callable (at par) 20-year, 5% coupon bond with annual coupon payments. The bond can be called at par in one year after release or any time after that on a coupon payment date. On release, it has a price of $102 per $100 of face value. What is the yield to worst of this bond when it is released?

• A) 4.84%
• B) 2.94%
• C) 5.60%
• D) 6.66%

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Definitions:

American Democracy

A political system in the United States based on principles of popular sovereignty, representative governance, and the protection of individual rights.

Eligible To Vote

Having the right or qualifications to participate in an election, usually as defined by criteria such as age, citizenship, and residency.

Adult White Men

A social category used historically in various contexts, often to denote those who held particular rights or privileges not afforded to other groups.

1840

The year that marks significant global events, including the beginning of the Opium War between Britain and China.