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A company issues a $1,000 perpetual bond. The current rate is 6%. Next period, the ratewill change to either 4% or 10%, with equal probability.
A company issues a $1,000 perpetual bond. The current rate is 6%. Next period, the ratewill change to either 4% or 10%, with equal probability. The bond is callable at the endof the first year only, for a price of $1,117.90. What is the coupon amount, if the bond sells at par?
The answer is 83.51 and i cant figure out how to get this answer.
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