Question
Callable bond. Corso Books has just sold a callable bond. It is a thirty-year semiannual bond with an annual coupon rate of 12% and $1,000
Callable bond. Corso Books has just sold a callable bond. It is a thirty-year semiannual bond with an annual coupon rate of 12% 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 (2 coupon payments), what is the bond price if priced with the assumption that the call will be on the first available call date?
It is a thirty-year
semiannualsemiannual
bond with an annual
coupon rate
LOADING...
of
1212%
and
$1 comma 0001,000
par value. The issuer, however, can call the bond starting at the end of
1010
years. If the
yield to call
LOADING...
on this bond is
55%
and the call requires Corso Books to pay one year of additional interest at the call
(22
coupon payments), what is the bond price if priced with the assumption that the call will be on the first available call date?
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