A Company Issues a Callable (At Par) Five-Year, 7% Coupon

question 14

Multiple Choice

A company issues a callable (at par) five-year, 7% 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 $110 per $100 of face value. What is the yield to call of this bond when it is released?

• A) 4.71%
• B) 2.73%
• C) 5.66%
• D) 1.40%

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Definitions:

Fibroblasts

Cells found in connective tissue that produce collagen and other fibers, playing a key role in wound healing and tissue repair.

Endocrine Gland

Endocrine system glands that secrete hormones directly into the bloodstream to regulate different body functions.

Epithelial Surface

The layer of cells covering the surfaces of the body, including the skin, organs, and internal passageways.

Bloodstream

The flowing blood within the circulatory system of the body, transporting oxygen, nutrients, and waste products.