Callable bond. Corso Books has just sold a callable bond . It is a thirty-year monthly bond with an annual coupon rate of 10% and $5,000 par value. The issuer, however, can call the bond starting at the end of 6 years. If the yield to call on this bond is 8% and the call requires Corso Books to pay one year of additional interest at the call (12 coupon payments), what is the bond price if priced with the assumption that the call will be on the first available call date?
Callable bond. Corso Books has just sold a callable bond . It is a thirty-year monthly bond with an annual coupon rate of 10% and $5,000 par value. The issuer, however, can call the bond starting at the end of 6 years. If the yield to call on this bond is 8% and the call requires Corso Books to pay one year of additional interest at the call (12 coupon payments), what is the bond price if priced with the assumption that the call will be on the first available call date?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Callable
bond.
Corso Books has just sold a
callable bond
.
It is a thirty-year
monthly
bond with an annual
coupon rate
of
10%
and
$5,000
par value. The issuer, however, can call the bond starting at the end of
6
years. If the
yield to call
on this bond is
8%
and the call requires Corso Books to pay one year of additional interest at the call
(12
coupon payments), what is the
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