Given the following information: Current Interest Rate is 14% There are 3 different scenarios:
Interest Rate can stay the same at 14% with a probability of 0.3 or increase to 16% with a probability of 0.23 or decrease to 12% with a probability of 0.47
Bond's information: Maturity is 24 years, Coupon is 14%, paid annually, Par value is $1,000
The call Price is $1,112
a). If the bond can be called immediately, the price of the callable bond is $______.
b). If there is a call protection period of 6 years (s), the price of the callable bond is $______.