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REMEMBER TO SAVE ANSWERS FREQUENTLY. Questions 17-19 utilize related information. A Tanzania Tapestry Corporation bond, which has a $1,000 par value and 7.9% stated annual

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REMEMBER TO SAVE ANSWERS FREQUENTLY. Questions 17-19 utilize related information. A Tanzania Tapestry Corporation bond, which has a $1,000 par value and 7.9% stated annual coupon interest rate (with interest payments received semiannually), currently sells for a price of $988. The bond was issued six years ago with a 40-year maturity, but it can be called by the issuing firm as early as ten years after the original issue date. If the bond is called the holder receives a premium of $79, in addition to the par value, at the call date. QUESTION: PLEASE REFER TO THE ATACHMENT TO QUESTION 18 IN ANSWERING. Which of the five equations shown would you use in computing the bond holder's YIELD TO CALL (also known as yield to first call, because we make the assumption that the bond would be called at the earliest possible date)? a. EQUATION 1: $988 = $39.50 b. EQUATION 2: $1,079 = $39.50 so(9) 09 (1) (6) sos (2) (2) -5,00 (2-)" I c. EQUATION 3: $988 = $39.50 d. EQUATION 4: 8 $1,079 = $79.00 $988 $67) e. EQUATION 5: $988 = $39.50 (43). 1.00()" O A. Equation 1 O B. Equation 2 O C. Equation 3 O D. Equation 4 E. Equation 5

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