Ten years ago the Templeton Company issued 20-year bonds with an 9% annual coupon rate at their $1,000 par value. The bonds had an 6% call premium, with 5 years of call protection. Today Templeton called the bonds. 3. Compute the reolized rote of retum for an investor who purchased the bonds when they were issued and held them until they were calied. Round your answer to two decimal places. b. Why the investor should or should not be happy that Templeton ealled them. 1. Since the bonds have been called, interest rates must have risen sufficiently such that the YTc is greater than the rTM. If investors wish to reinvest their interest receipts, they can now do so at higher interest rates. II. Since the bonds have been called, interest rates must have risen sutficiently such that the VTc is greater than the vTM, If investors wish to reinvest their interest receipts, they must do so at lower interest rates. III. Since the bonds have been called, investors will receive a call premium and can declare a capital gain on their tax returns. IV. Since the bonds have been called, investors will ne longer need to consider reinvestment rate risk. V. Since the bonds have been called, interest rates must have fallen sufficiently such that the YTC is less than the YTM. If investors wish to reinvest their interest receipts, they must do so at lower interest rates