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

question 73

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

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Definitions:

Shoes

Footwear items designed to protect and comfort human feet while offering support for various activities.

Lungs

Paired respiratory organs situated within the thorax of mammals and many other organisms, essential for breathing and exchanging oxygen and carbon dioxide.

Heart

A muscular organ in most animals, which pumps blood through the circulatory system by rhythmic contraction and dilation.

Tonsils

Lymphoid tissues located in the pharynx that play a role in protecting the body from respiratory and gastrointestinal infections.