A Company Issues a Callable (At Par)five-Year, 7% Coupon Bond

Multiple Choice

A company issues a callable (at par) five-year, 7% coupon bond with annual coupon payments. The bond can be called at par in one year after release or any time after that on a coupon payment date. On release, it has a price of $110 per $100 of face value. What is the yield to call of this bond when it is released?

A) 2.73%
B) 4.71%
C) 1.40%
D) 5.66%