Suppose that eight years ago a corporation issued a 15-year bond with a coupon rate of 7%

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Suppose that eight years ago a corporation issued a 15-year bond with a coupon rate of 7% and the indenture specifies a make-whole call premium of 25 basis points over the yield on a comparable Treasury at the time the call provision is exercised. Assume that the call is exercised immediately after the payment of a coupon. At the time the issue is called, the yield on a comparable Treasury is 3.15%. What is the make-whole call price per $100 of par value if the issue is called at the end of the eighth year?

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Bond Markets Analysis And Strategies

ISBN: 9780253337535

10th Edition

Authors: Frank J. Fabozzi, Francesco A. Fabozzi

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