On January 1, Year 1, ABC Inc

Multiple Choice

On January 1, Year 1, ABC Inc., a publicly traded enterprise, issued $4,000,000 worth of bonds with detachable stock warrants.The bonds mature on December 31st, Year 4 and pay interest annually on December 31st at a coupon rate of 6% per annum.The yield to maturity on similar bonds was 5% at the date of issue.The bonds were issued at 108. Based on the information provided, which of the following statements is most correct?

A) A gain of $51,294.
B) A loss of $39,776.
C) A gain of $39,776.
D) A loss of $51,294.