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Problem 1 5 - 1 0 Valuing Callable Bonds Bandon Manufacturing intends to issue callable, perpetual bonds with annual coupon payments and a par value
Problem Valuing Callable Bonds Bandon Manufacturing intends to issue callable, perpetual bonds with annual coupon payments and a par value of $ The bonds are callable at $ Oneyear interest rates are percent. There is a percent probability that longterm interest rates one year from today will be percent, and a percent probability that they will be percent. Assume that if interest rates fall the bonds will be called. What coupon rate should the bonds have in order to sell at par value? Do not round intermediate calculations and enter your answer as a percent rounded to decimal places, eg
Problem Valuing Callable Bonds
Bandon Manufacturing intends to issue callable, perpetual bonds with annual coupon payments and a par value of $ The bonds are callable at $ Oneyear interest rates are percent. There is a percent probability that longterm interest rates one year from today will be percent, and a percent probability that they will be percent. Assume that if interest rates fall the bonds will be called. What coupon rate should the bonds have in order to sell at par value? Do not round intermediate calculations and enter your answer as a percent rounded to decimal places, eg
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