Question
As a trader, you are trying to determine the price of a prepayable (ie, callable) bond. An otherwise equivalent non-prepayable bond is traded at 101.00
As a trader, you are trying to determine the price of a prepayable (ie, callable) bond. An otherwise equivalent non-prepayable bond is traded at 101.00 for a face value of 100.00. A financial engineer of your firm evaluates that the value of the prepayment option is 2.50.
What is the price of the prepayable bond?
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Data Analysis And Decision Making
Authors: Christian Albright, Wayne Winston, Christopher Zappe
4th Edition
538476125, 978-0538476126
