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A 20 year bond of $1,000 was issued at par on January 1, 2002 with a coupon of 4% pa. Calculate, using Makehams formula, the
A 20 year bond of $1,000 was issued at par on January 1, 2002 with a coupon of 4% pa.
- Calculate, using Makehams formula, the value of the bond on January 1, 2014 assuming the interest at that time was 3.70%.
- Assume the bond can be recalled by the issuer at this time at $1,025. Should the issuer recall the bond? Why?
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