A 10-year bond has a face value of $1,000. The bond has a 7 percent semiannual coupon. The bond is callable in 7 years at a call price of $1,040. The bond has a nominal yield to call of 6.5 percent. What is the bond’s nominal yield to maturity?
a. 3.14%
b. 6.05%
c. 7.62%
d. 6.27%
e. 6.55%
Answer: D
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