Question 4 0 / 1 pts Yields are 8.3% and will stay at that level forever. A callable bond has maturity of 8 years and coupon rate of 14.7% (interest paid annually). All rates are annualized assuming periodicity of 1 (i.e. annual compounding). The issuer can call the bond at a call price of 107, but the bond has a call protection of 3 years. What would be the issuer's gain from the bond's embedded call option when the call protection expires? If you determine that the issuer will call the bond, report the gain from calling. If you determine that the issuer will not call the bond, report a gain of O. (If your solution is $4.44 then enter "4.44" as the answer. Precision is 0.01+/- 0.02.) ered -8.3 swer 18.35 margin of error +/- 0.02 Compare the call price to the present value of the liability at the yield available when the call protection expires. If the call price is higher, then the issuer will not exercise the call and the gain is 0. If the call price is lower, then the issuer will exercise the call and the gain is PV of the liability minus the transaction costs. Again, the comparison is done at the time the option expires at rates available at that time. Question 4 0 / 1 pts Yields are 8.3% and will stay at that level forever. A callable bond has maturity of 8 years and coupon rate of 14.7% (interest paid annually). All rates are annualized assuming periodicity of 1 (i.e. annual compounding). The issuer can call the bond at a call price of 107, but the bond has a call protection of 3 years. What would be the issuer's gain from the bond's embedded call option when the call protection expires? If you determine that the issuer will call the bond, report the gain from calling. If you determine that the issuer will not call the bond, report a gain of O. (If your solution is $4.44 then enter "4.44" as the answer. Precision is 0.01+/- 0.02.) ered -8.3 swer 18.35 margin of error +/- 0.02 Compare the call price to the present value of the liability at the yield available when the call protection expires. If the call price is higher, then the issuer will not exercise the call and the gain is 0. If the call price is lower, then the issuer will exercise the call and the gain is PV of the liability minus the transaction costs. Again, the comparison is done at the time the option expires at rates available at that time