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A company has a 10% bond that has a face value of $1000 and matures in 10 years. Assume that coupon payments are made semi-annually.
A company has a 10% bond that has a face value of $1000 and matures in 10 years. Assume that coupon payments are made semi-annually. The bonds can be called after 5 years at a premium of 5% over face value. What is the value of the bond if rates drop immediately to 8%?
$1,142
$1,136
$1,450
$1,332
$457
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