At one point, some Treasury bonds were callable. Consider the prices on the following three Treasury issues as of May 15, 2019: 7.10 May 23 112.34375 112.40625-40625 5.40 8.85 May 23 109.46875 109.53125 - 15625 5.36 12.60 May 23 146.62500 146.81250 -46875 5.44 The bond in the middle is callable in February 2020. What is the implied value of the call feature? Assume a par value of $1,000. (Hint: Is there a way to combine the two noncallable issues to create an issue that has the same coupon as the callable bond?) (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Call value:

At one point, some Treasury bonds were callable. Consider the prices on the following three Treasury issues as of May 15, 2019: 7.10 May 23 112.34375 112.40625-40625 5.40 8.85 May 23 109.46875 109.53125 - 15625 5.36 12.60 May 23 146.62500 146.81250 -46875 5.44 The bond in the middle is callable in February 2020. What is the implied value of the call feature? Assume a par value of $1,000. (Hint: Is there a way to combine the two noncallable issues to create an issue that has the same coupon as the callable bond?) (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Call value:

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 4EA: On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated...

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