Question

If you knew it would be called, what is the maximum price you would pay for...

If you knew it would be called, what is the maximum price you would pay for a $1,000 face value 7.213% semi-annual coupon corporate bond maturing in exactly 19 years callable in 7 years at a call premium of 10.528%? The current market yield on comparable bonds is 8.355%?

Homework Answers

Answer #1

Hence, Maximum price is $999.75

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