Yields are 9.1%. A callable bond has maturity of 8 years and coupon rate of 8.6% (interest paid annually). All rates are annualized assuming periodicity of 1 (i.e. annual compounding). The issuer can call the bond immediately at a call price of 102 and will incur a transaction cost of 3.22 for every bond called. What would be the issuer's gain from the bond's embedded call option? If you determine that the issuer will call the bond, report the gain from calling. If you determine that the issuer will not call the bond, report a gain of 0.

(If your solution is $4.44 then enter "4.44" as the answer. Precision is 0.01+/- 0.02.)

Yields are 7.6% and will stay at that level forever. A callable bond has maturity of 8 years and coupon rate of 9.1% (interest paid annually). All rates are annualized assuming periodicity of 1 (i.e. annual compounding). The issuer can call the bond at a call price of 106, but the bond has a call protection of 3 years. What would be the issuer's gain from the bond's embedded call option when the call protection expires? If you determine that the issuer will call the bond, report the gain from calling. If you determine that the issuer will not call the bond, report a gain of 0.

(If your solution is $4.44 then enter "4.44" as the answer. Precision is 0.01+/- 0.02.)

You have purchased a putable bond with maturity of 6 years and coupon rate of 6.1% (interest paid annually). Yields can immediately change to 8.4% or 3.9% with equal likelihood, and once they change they will remain at that level forever. All rates are annualized assuming periodicity of 1 (i.e. annual compounding). You can put the bond back to the issuer immediately at a put price of 108. What is the fair price for this bond?

(If your solution is $4.44 then enter "4.44" as the answer. Precision is 0.01+/- 0.02.)