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Aps: Keep the Highest: 12 4. Problem 7.08 (Yield to Call) eBook Six years ago the Templeton Company issued 16-year bonds with a 15% annual coupon rate at their $1,000 par value. The bonds had a 9% cail premium, with 5 years of a protection. Today Templeton called the bonds. Compute the realized rate of return for an investor who purchased the bonds when they were sued and held them until they were called. Round your answer to two decimal places. access Tips ccess Tips FREE trial of UNLIMITED Why should or should not the investor be happy that Templeton called them 1. Investors should not be happy. Since the bonds have been called, interest rates must have fallen sufficiently such that the YTC dess than the YTH. If investors wish to reinvest their interest receipts, they must do we at lower interest rates I nvestors behov. Since the bonds have been calied, interest rates must have risen sufficiently such that the VTC is greater than the YTH. If investors wat reinvest their interest receipts, they can now desa gher interest rates. III Investors should be happy. Since the bonds have been called, investors will receive a ca premium and can declare a capital gain on the tax return IV. Investors should be happy. Since the bonds have been credi tors will no longer need to consider reinvestment rate risk ART TRIAL

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