A 10-year 5% ABC company bond is callable after 7 years and trades at par. Regular and
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Question:
A 10-year 5% ABC company bond is callable after 7 years and trades at par. Regular and 10 year borrowing costs for the company are 4% and 4.5%, respectively. Interest is paid semi-annually. The approximate value of the call option is
a 4.0%
b.8.2%
c. 5.0%
d. 60%
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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