6. Consider the following 3-year bond that pay an annual 7% coupon and is callable on the first coupon date with a call price of $101 The Interest rates in the tree are the calibrated forward rates plus the OAS - figures provided. a) What is the price of the callable bond? b) Suppose the non-callable 3-year bond with a 7% coupon is priced $101.5, what is the option cost for the callable bond? 10.02% 7.4296 5.82% 6.729% 5.02% 4.62% Opt Cost