Problem 4 (Required, 25 marks) We consider a 20-year callable bond issued today. The bond has face value F = 1000, annual coupon rate 6% payable annually. The bond is callable at any coupon payment date starting from 8th year. The redemption price is $1200 if the bond is called in 8th-13th year and is $1100 if the bond is called in 14th year-20th year (including maturity date). The minimum yield rate of the callable bond, quoted as annual nominal yield rate compounded annually, is 5.2%. Calculate the current price of the callable bond