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(8 pts.) What is the investor's annualized rate of return on the callable bond if interest rates increase in both 1 and 2 years (e.g.,
(8 pts.) What is the investor's annualized rate of return on the callable bond if interest rates increase in both 1 and 2 years (e.g., the 1 year rate at time 1 is 6.91%, the 1 year rate at time 2 is 9.96%)? (8 pts.) What is the investor's annualized rate of return on the callable bond if interest rates decrease in both 1 and 2 years (e.g., the 1 year rate at time 1 is 5.12%, the 1 year rate at time 2 is 5.47%)? (8 pts.) What is the investor's annualized rate of return on the callable bond if interest rates increase in both 1 and 2 years (e.g., the 1 year rate at time 1 is 6.91%, the 1 year rate at time 2 is 9.96%)? (8 pts.) What is the investor's annualized rate of return on the callable bond if interest rates decrease in both 1 and 2 years (e.g., the 1 year rate at time 1 is 5.12%, the 1 year rate at time 2 is 5.47%)
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