Callable bond. Corso Books has just sold a callable bond . It is a thirty-year monthly bond with an annual coupon rate of 10% and $5,000 par value. The issuer, however, can call the bond starting at the end of 6 years. If the yield to call on this bond is 8% and the call requires Corso Books to pay one year of additional interest at the call (12 coupon payments), what is the bond price if priced with the assumption that the call will be on the first available call date?
Callable bond. Corso Books has just sold a callable bond . It is a thirty-year monthly bond with an annual coupon rate of 10% and $5,000 par value. The issuer, however, can call the bond starting at the end of 6 years. If the yield to call on this bond is 8% and the call requires Corso Books to pay one year of additional interest at the call (12 coupon payments), what is the bond price if priced with the assumption that the call will be on the first available call date?
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter10: Long-term Liabilities
Section: Chapter Questions
Problem 10.3E: Issue Price The following terms relate to independent bond issues: 500 bonds; $1,000 face value; 8%...
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Question
Callable
bond.
Corso Books has just sold a
callable bond
.
It is a thirty-year
monthly
bond with an annual
coupon rate
of
10%
and
$5,000
par value. The issuer, however, can call the bond starting at the end of
6
years. If the
yield to call
on this bond is
8%
and the call requires Corso Books to pay one year of additional interest at the call
(12
coupon payments), what is the
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