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QWE wishes to issue a perpetual callable bond (par value =$1,000 ) that pays 7.8% annual coupon. The current interest rate is 8.3%. Next year,

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QWE wishes to issue a perpetual callable bond (par value =$1,000 ) that pays 7.8% annual coupon. The current interest rate is 8.3%. Next year, the interest rate will be 3.0% or 9.1% with equal probability. The bond is callable at $1,040, and it will be called if the interest rate drops to 3.0%. What is the issue price of this callable bond

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