A 5% bond with semiannual coupons is redeemable at par in k years. It is purchased at a premium and the premium is $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 and the premium is $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%