Given the following information: Current Interest Rate is 5% There are 3 different scenarios: Interest Rate can stay the same at 5% with probability 1/3 or increase to 6% with probability 1/3 or decrease to 4% with probability 1/3 Bond's information: Maturity is 8 years Coupon is 5%, paid annually Par value is $1,000 Call Price is $1,050 If the bond can be called immediately, at what interest rate will the bond be called?

A.) 4%

B.) 6%

C.) 5%

What is the price of the callable bond?