Bond Features Maturity (years) 5 Face Value = $1,000 Coupon Rate = 5.00% Coupon dates (Annual) Market interest rate today 5.00% Time to call (years) 3 Price if Called $1,050.00 Market interest rate in Year 3 4.00% The above bond is callable in 3 years. When the bond is issued today, interest rates are 5.00% . In 3 years, the market interest rate is 4.00% . Should the firm call back the bonds in year 3 and if so, how much would the firm save or lose by calling back the bonds? no it should not call back the bonds, it will lose $32.07 no it should not call back the bonds, it will lose $31.14 yes it should call back the bonds, it will save $29.58 no it should not call back the bonds, it will lose $29.58 yes it should call back the bonds, it will save $32.07 yes it should call back the bonds, it will save $31.14