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Erin purchased a $1,000 par value bond with 4.5% annual coupons, maturing in 30 years, and redeemable at par. Erin bought the bond at a
Erin purchased a $1,000 par value bond with 4.5% annual coupons, maturing in 30 years, and redeemable at par. Erin bought the bond at a premium to yield 3% per annum. The bond was actually called 26 years later, just after the 26th coupon, at 108% of par value. Erin's rate of return on this investment is equal to:
a. 2.93%
b. 2.98%
c. 3.01%
d. 3.05%
e. 3.08%
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