5 2 6. Consider the following 3-year bond that pay an annual 6.5% coupon and is callable on the first coupon date with a call price of $102. a) What is the price of the callable bond? b) Suppose the non-callable 3-year bond with a 6.5% coupon is priced $108, what is the option cost for the callable bond? 8.25% 6.00% 4.54% - 5.90% 4.34% 4.27% 5 2 6. Consider the following 3-year bond that pay an annual 6.5% coupon and is callable on the first coupon date with a call price of $102. a) What is the price of the callable bond? b) Suppose the non-callable 3-year bond with a 6.5% coupon is priced $108, what is the option cost for the callable bond? 8.25% 6.00% 4.54% - 5.90% 4.34% 4.27%