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Your company has bonds that mature in 10 years and have a face value of $1,000. The bonds have an 8 percent quarterly coupon


 

Your company has bonds that mature in 10 years and have a face value of $1,000. The bonds have an 8 percent quarterly coupon (that is, the nominal coupon rate is 8 percent and hence pays $20 every quarter). The bonds may be called in five years. The bonds have a nominal yield to maturity of 6 percent (1.5% per quarter) and a yield to call of 5.5 percent (1.375% per quarter). Determine the bonds' call price.

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