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At one point, some Treasury bonds were callable. Consider the prices on the following three Treasury issues as of May 15, 2016: 7.20 May 20
At one point, some Treasury bonds were callable. Consider the prices on the following three Treasury issues as of May 15, 2016: 7.20 May 20 n 8.95 May 20 12.70 May 20 116.40625 113.53125 148.68750 116.46875 113.59375 148.87500 -.46875 - 21875 -.53125 5.42 5.38 5.46 The bond in the middle is callable in February 2017. What is the implied value of the call feature? Assume a par value of $1,000. (Hint: Is there a way to combine the two noncallable issues to create an issue that has the same coupon as the callable bond?) (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Call value $D
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