You are considering an investment in the bonds of the Front Range Electric Co. with 20 years to maturity. The bond has a coupon rate of 5% and interest is paid semiannually. It has a face value of $1,000 and is currently selling for $1,280.

These bonds can be called in 6 years at 107% of the par value (call premium of 7% of the face value).

2) What is the yield to call?

5.00%

1.27%

4.81%

3.10%

2.77%