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
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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 bond price if priced with the assumption that the call will be on the first available call​ date?

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