Question: Use the bond term's below to answer the question Maturity 8 years Coupon Rate 6% 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 6%

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 5%

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

-$4.32

-$4.97

-$4.12

-$4.54

-$4.77

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