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27) Taussig Corp.'s bonds currently sell for $840. and a 20-year maturity, but they can be called in 5 years at $1,067.50. Assume that no
27) Taussig Corp.'s bonds currently sell for $840. and a 20-year maturity, but they can be called in 5 years at $1,067.50. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. Under these conditions, what rate of return should arn investor expect to earn if he or she purchases these bonds? A. 9.81% B. 8.69% C. 7.74% D. 6.94% E. 7.98% They have a par value of $1000 and a 6.35% annual coupon rate
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