A Company Issues a 10-Year,callable Bond at Par with 8

question 54

Multiple Choice

A company issues a 10-year,callable bond at par with 8% annual coupon payments.The bond can be called at par in one year after issue or any time after that on a coupon payment date.The call price is $105 per $100 of face value.What is the yield to call if this bond is called in one year?

• A)5%
• B)8%
• C)10%
• D)11%
• E)13%

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Definitions:

Prohibiting Criticism

A policy or practice that restricts or discourages negative feedback or constructive dissent within an organization or group.

Free Flowing

Describes a process or system that operates efficiently and smoothly without any obstructions or restrictions.

Enthusiasm

A feeling of energetic interest in a particular subject or activity and an eagerness to be involved in it.

Disconfirming Data

Information or evidence that challenges or contradicts established beliefs or theories.