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

question 90

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 maturity of this bond when it is released?

• A)2.80%
• B)5.66%
• C)4.71%
• D)1.40%

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Definitions:

Socialization

The process by which individuals learn and internalize the values, beliefs, and norms of their society, becoming functional members of that society.

Agents of Socialization

Individuals, groups, or institutions that play significant roles in integrating individuals into the norms, values, and cultures of their society.

Social Approval

The affirmation, acceptance, or endorsement by members of a society or group, often influencing behavior and conforming to societal norms.

Conformity

The act of aligning one's behaviors, attitudes, or beliefs to match those of a group or societal norms.