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Callable Bonds
The following bonds have a par value of $1,000 and the
required rate of return is 10%.
Bond XY: 5¼ percent coupon, with interest paid annually for 20
years
Bond AB: 14 percent coupon, with interest paid annually for 20
years
What is each bond's current market price?
Bond XY
Bond AB
Rate
Nper
PMT
FV
Type
PV
If current interest rates are 9%, which bond would you expect to
be called? Explain.

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Callable BondsThe followin.docx

  • 1. Callable Bonds The following bonds have a par value of $1,000 and the required rate of return is 10%. Bond XY: 5¼ percent coupon, with interest paid annually for 20 years
  • 2. Bond AB: 14 percent coupon, with interest paid annually for 20 years What is each bond's current market price? Bond XY Bond AB Rate
  • 4. PV If current interest rates are 9%, which bond would you expect to be called? Explain.