Hazeltine Corp Has a Callable Bond Outstanding

question 89

Multiple Choice

Hazeltine Corp has a callable bond outstanding. The call provision guarantees that the bond won't be called in the first ten years of its life, and if it is called thereafter the bondholder will be compensated with an extra two year's interest at the 14% coupon rate. The bond is now four years into its 25 year life. The market interest rate is now 7%, so it is likely that the bond will be called as soon as the contract allows. What should the bond sell for today?

• A)$1,523.53
• B)$1,428.39
• C)$1,338.23
• D)$2,199.96

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Definitions:

Requirements

Conditions or standards that must be met or complied with, often used in the context of procedures, regulations, or criteria.

Mexican War

Also known as the Mexican-American War (1846-1848), a conflict between the United States and Mexico that resulted in the U.S. acquisition of territories in the western portion of North America, including California and New Mexico.

Annexation

The act of incorporating a land area into another political entity, such as a country or state, often implying a forceful or unilateral acquisition.

Statehood

The status attained by a region or territory when it becomes a recognized state within a federal system or an independent nation, often involving a legal and constitutional process.