Callable bond. Corso Books has just sold a callable bond. It is a thirty-year semiannual bond with an annual coupon rate of 8% and $1,000 par value. The issuer, however, can call the bond starting at the end of 10 years. If the yield to call on this bond is 10% and the call requires Corso Books to pay one year of additional Interest at the call (2 coupon payments), what is the bond price if priced with the assumption that the call will be on the first available call date? What is the bond price if priced with the assumption that the call will be on the first available call date? (Round to the nearest cent.)

Callable bond. Corso Books has just sold a callable bond. It is a thirty-year semiannual bond with an annual coupon rate of 8% and $1,000 par value. The issuer, however, can call the bond starting at the end of 10 years. If the yield to call on this bond is 10% and the call requires Corso Books to pay one year of additional Interest at the call (2 coupon payments), what is the bond price if priced with the assumption that the call will be on the first available call date? What is the bond price if priced with the assumption that the call will be on the first available call date? (Round to the nearest cent.)

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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A 1,000 bond with 6% semiannual coupons is redeemable at 1,050 in 20 years. The bond is selling for 975. (a) What is the nominal annual yield rate convertible semiannually to a purchaser who buys the bond at this price? (b) What price should be paid to earn a nominal annual rate of 7% convertible semiannually.
Bandon Manufacturing intends to issue callable, perpetual bonds with annual coupon payments and a par value of $1, 000. The bonds are callable at $1, 230. One year interest rates are 8 percent. There is a 60 percent probability that long-term interest rates one year from today will be 10 percent, and a 40 percent probability that they will be 8 percent. Assume that if interest rates fall the bonds will be called. What coupon rate should the bonds have in order to sell at par value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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Bandon Manufacturing intends to issue callable, perpetual bonds with annual coupon payments and a par value of $1,000. The bonds are callable at $1,255. One-year interest rates are 8 percent. There is a 60 percent probability that long-term interest rates one year from today will be 9 percent, and a 40 percent probability that they will be 7 percent. Assume that if interest rates fall the bonds will be called. What coupon rate should the bonds have in order to sell at par value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Coupon rate %
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ITS THE SAME QUESTION ..ITS NOT INCOMPLETE. CALLABLE BOND. CORSO BOOKS HAS JUST SOLD A CALLABLE BOND. ITS A THIRTY-YEAR SEMI-ANNUAL BOND WITH AN ANNUAL COUPON RATE OF 8% AND $1000.00 PAR VALUE. THE ISSUER, HOWEVER, CAN CALL THE BOND STARTING AT THE END OF 8 YEARS. IF THE YIELD TO CALL BOND IS 6% AND THE CALL REQUIRES CORSO BOOKS TO PAY ONE YEAR OF ADDITIONAL INTEREST AT THE CALL (2 COUPON PAYMENTS). WHAT IS THE THE BOND PRICE IF PRICED WITH THE ASSUMPTION THAT THE CALL WILL BE ON THE FIRST AVAILABLE CALL DATE ? WHAT IS THE BOND PRICE IF PRICED WITH THE ASSUMPTION THAT THE CALL WILL BE ON THE FIRST AVAILABLE CALL DATE ?
you are considering the purchase of a semiannual bond with a 9% coupon rate, it is trading at $875 and matures at $ 1000 in 25 years. What is the coupon payment on this bond?.
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A Boba Drinks LLC. is considering to issue perpetual, callable bonds with a coupon rate of 5% paid annually, and a par value of $1,000. The nominal interest rate on these bonds will be 8% for the next year. Within a year, the nominal rate on the bonds will be either 12% with probability 0.7, or 9% with probability 0.3. The bonds are callable at $1400. If the bonds are called and the interest rate decreases, what is the price of the callable bond today?

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