A $1,000 par value 8% bond with quarterly coupons is callable five years after issue. The bond
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A $1,000 par value 8% bond with quarterly coupons is callable five years after issue. The bond matures for 1000 at the end of ten years and is sold to yield a nominal rate of 6 percent compounded quarterly, calculated under the assumption that the bond will not be called, and is redeemed at maturity. Please determine the call premium at the end of five years, that would yield the purchaser the same nominal rate of 6% compounded quarterly if the bond is, in fact, called at the end of five years
Related Book For
Financial Markets and Institutions
ISBN: 978-0077861667
6th edition
Authors: Anthony Saunders , Marcia Cornett
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