A $100 bond with 4% coupon rate matures in 25 years. It bears semiannual coupons and is purchased for $117.50 to yield i⁽²⁾.

A $100 bond with 5% coupon rate also matures in 25 years. It also bears semiannual coupons, but is purchased for $135.00 to yield i⁽²⁾.

What is i⁽²⁾?

1. Less than 1.75%

2. At least 1.75%, but less than 2.25%

3. At least 2.25%, but less than 2.75%

4. At least 2.75%, but less than 3.25%

5. 3.25% or more