Question: At one point, certain U.S. Treasury bonds were callable. Consider the prices in the following three Treasury issues as of May 15, 2017: 05/15/2020 6.35

At one point, certain U.S. Treasury bonds were callable. Consider the prices in the following three Treasury issues as of May 15, 2017:


05/15/2020	6.35	108.62500	108.68750	.31250	3.290
05/15/2020	7.40	109.15625	109.21875	.09375	4.100
05/15/2020	8.15	114.21875	114.40625	.46875	3.090

The bond in the middle is callable in February 2018. What is the implied value of the call feature? Assume a par value of $1,000. (Hint: Is there a way to combine the two noncallable issues to create an issue that has the same coupon as the callable bond?) (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Call value

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