The TrunkLine Company debtholders are promised payments of $35 if the firm does well, but will receive only $20 if the firm does poorly. If the bonds are selling at a price of $25, the promised return to the bondholders is approximately:
A) 2.9%.
B) 40%.
C) 27.3%.
D) 16.86%.
E) 100%.

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The Answer of The TrunkLine Company debtholders are promised payments of $35 if the firm does well, but will receive only $20 if the firm does poorly. If the bonds are selling at a price of $25, the promised return to the bondholders is approximately:
A) 2.9%.
B) 40%.
C) 27.3%.
D) 16.86%.
E) 100%.

The TrunkLine Company Debtholders Are Promised Payments of $35 If