Suppose that five years ago a corporation issued a 9-year bond with a coupon rate of 6.50% and the indenture specifies a make-whole call premium of 75 basis points over the yield on a comparable Treasury at the time the call provision is exercised. Assume the call is exercised immediately after the payment of a coupon. At the time the issue is called, the yield on a comparable Treasury is 4.05%. What is the current make-whole call price per $100 of par value?
Suppose that five years ago a corporation issued a 9-year bond with a coupon rate of 6.50% and the indenture specifies a make-whole call premium of 75 basis points over the yield on a comparable Treasury at the time the call provision is exercised. Assume the call is exercised immediately after the payment of a coupon. At the time the issue is called, the yield on a comparable Treasury is 4.05%. What is the current make-whole call price per $100 of par value?
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 3EB: Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semiannual...
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Suppose that five years ago a corporation issued a 9-year bond with a coupon rate of 6.50% and the indenture specifies a make-whole call premium of 75 basis points over the yield on a comparable Treasury at the time the call provision is exercised. Assume the call is exercised immediately after the payment of a coupon. At the time the issue is called, the yield on a comparable Treasury is 4.05%. What is the current make-whole call price per $100 of par value?
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