Seven vears ago the Templeton Company issued 30 -year bonds with an 11% annual coupon rate at their $1,000 par value. The bonds had a bw cal premium, with 5 vears of cal protection, today Templeton called the bonds. Campute the realized rate of return for an imvertor whe purchssed the bonds when they were iswed and heid them until they were caled. Round your annwer to two decimal places. Why should or should not the investor be happy that Templeton called them? 1. Investors shpuld be happy, Since the bonds have been caled, inveitors will no longer need to consider reivestment rote risk. ti. Investors should not be happy. Since the bonds hove been ealled, interest rates must have fallen sufficently such that the YTC is less than the VTM. af investars wish to teinest their ieterest receipts, they must do so at lower interest rates. II. Investers sheuld be happy. Since the bands have been called, interest rates must have risen wufficienly such that the YTC is greater than the riM. If investors nian to reinvest their interest receipts, they can now do so at hipher interest rates. IV. Investors shevid be happy, since the bonds have been called, investors will receive a call premium and can declare a capital gain on their tax returns