Omega Inc. holds a 12-year bond that has a 12 percent coupon rate and a marginal tax rate of 40 percent. It is currently selling for $1,000, which is the bond's face value. If interest is paid semiannually, the bond's yield to maturity is:
A. equal to 12 percent.
B. greater than 12 percent.
C. less than 12 percent.
D. equal to 7.2 percent.
E. greater than 16.8 percent.
Answer: A
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