Question
Callable bond. Corso Books has just sold a callable bond. It is a thirty-year monthly bond with an annual coupon rate of 8% and $1,000
Callable bond.
Corso Books has just sold a callable bond. It is a thirty-year monthly bond with an annual coupon rate of 8% and $1,000 par value. The issuer, however, can call the bond starting at the end of 10 years. If the yield to call on this bond is 5% and the call requires Corso Books to pay one year of additional interest at the call (12 coupon payments), what is the bond price if priced with the assumption that the call will be on the first available call date?
1. What is the bond price if priced with the assumption that the call will be on the first available call date? (Round to the nearest cent.)
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