A 5% bond with semiannual coupons is redeemable at par in kk years. It is purchased at a premium of $300. A 4% bond with semiannual coupon payments and with the same par value is also redeemable at par in k years. It is purchased at a premium of $100.

The nominal annual yield rate compounded semiannually is the same for these two bonds. Which of the following is closest to this yield rate.

A 2.0%

B 2.5%

C 3.0%

D 3.5%

E 4.0%