Question: Use the bond term's below to answer the question Maturity 8 years Coupon Rate 5% Face value $1,000 Annual Coupons The bond is callable in

Use the bond term's below to answer the question

Maturity 8 years

Coupon Rate 5%

Face value $1,000

Annual Coupons

The bond is callable in year 4

The call price is $1,040

The interest rate in period 4 is 4%

If the firm calls back the bond, how much does the firm save or lose?

Group of answer choices

-$3.36

-$4.05

-$3.52

-$3.89

-$3.70

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