This question has been posted multiple times now and continues to get incorrect answers. Given the following information: Current Interest Rate is 3% There are
This question has been posted multiple times now and continues to get incorrect answers.
Given the following information:
Current Interest Rate is 3%
There are 3 different scenarios:
Interest Rate can stay the same at 3% with probability 0.15
or increase to 5% with probability 0.17
or decrease to 1% with probability 0.68
Bond's information:
Maturity is 23 years
Coupon is 3% , paid annually
Par value is $1,000
Call Price is $1,019
There is a call protection period of 14 years.
a. At what interest rate will the bond be called on the first call date?
ANSWER: 1% - I DO NOT NEED YOU TO SOLVE THIS PART
b. what is the price of the callable bond? (in 2 decimal places)
WRONG ANSWERS: 1138.04, 1124, 1019
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