Question
Consider a bond with the following characteristics: 24 years to maturity, 10.50% coupon rate, interest paid semi-annually, $1,000 par value, $1,017 call price, and no
Consider a bond with the following characteristics: 24 years to maturity, 10.50% coupon rate, interest paid semi-annually, $1,000 par value, $1,017 call price, and no call protection. If rates change to 9.00% will the company gain from calling the bond? Assume that transaction cost is $104 .
The PV of liability is $ ?
The Gain/Loss from calling a bond is $ ?
. Should you "call" or "no call"?
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Petromania Black Gold Paper Barrels And Oil Price Bubbles
Authors: Daniel O'Sullivan
1st Edition
1906659249,190665977X
