A Firm Is Planning to Issue a Callable Bond with 8

question 14

Multiple Choice

A firm is planning to issue a callable bond with 8% coupon and 10 years to maturity.A straight bond with similar coupon is priced at $1,000.If the value of the issuer's call option is estimated to be $60,what is the value of the callable bond?

• A) $940
• B) $970
• C) $1,000
• D) $1,060

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