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At one point, some Treasury bonds were callable. Consider the prices on the following three Treasury issues as of May 1 5 , 2 0
At one point, some Treasury bonds were callable. Consider the prices on the following three Treasury issues as of May :
tableMay May May
The bond in the middle is callable in February What is the implied value of the call feature? Assume a par value of $Hint: Is there a way to combine the two noncallable issues to create an issue that has the same coupon as the callable bond?
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