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Third Inc. wishes to issue a perpetual callable bond. The current interest rate is 6%. Next year, there is a 30% chance that the interest rate will be 4.5% and a 70% chance that the rate will be 8.0%. The bond is callable at $1,000 plus an additional coupon payment and it will be called if the interest rate drops to 4.5%.
a. If the bond sells for par today, what is the coupon?
b. What is the bond's value today if the coupon is set at $70?
c. If the bond is priced at $1,000, what is the cost to Third of the call provision?
Suppose the interest rate for a one-period bond is 4%. (a) What is the price of an asset paying (1,1,1) which means 1 after 1 period, 1 after 2 periods, and 1 after 3 periods.
1-Dec $92,000.00 of 5% bonds are purchased with check. Interest is paid once a year and will mature in 5 years. The market yield for these bonds is 4%.
DUTIES OF TRUSTEES 1) Not to profit from the trust : A trustee may not receive remuneration except: By order of the court, if the trust is very onerous or the services of the
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