Donald purchases a 15-year bond that pays semi-annual coupons at 5% annual coupon rate. He pays 2,345 for the bond, which can be called at its par value X on any coupon date starting at the end of year 10. The price guarantees that Donald will receive a yield of at least 4% convertible semi-annually. Joe purchases a 15 year bond identical to Donald's, except it is not callable. Assuming the same yield, what is the price of Joe's bond.

Answer rating: 100% (QA)

To calculate the price of Joes bond we can follow these st... View the full answer