At one point, some Treasury bonds were callable. Consider the prices on the following three Treasury issues as of May 15, 2019: 7.05 May 23 110.31250 110.37500 -.37500 5.39 - 12500 5.35 107.43750 107.50000 8.80 May 23 12.55 May 23 145.93750 146.12500 -.43750 5.43 The bond in the middle is callable in February 2020. What is the implied value of the call feature? Assume a par value of $1,000. (Hint: Is there a way to combine the two noncallable issues to create an issue that has the same coupon as the callable bond?) (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Call value

At one point, some Treasury bonds were callable. Consider the prices on the following three Treasury issues as of May 15, 2019: 7.05 May 23 110.31250 110.37500 -.37500 5.39 - 12500 5.35 107.43750 107.50000 8.80 May 23 12.55 May 23 145.93750 146.12500 -.43750 5.43 The bond in the middle is callable in February 2020. What is the implied value of the call feature? Assume a par value of $1,000. (Hint: Is there a way to combine the two noncallable issues to create an issue that has the same coupon as the callable bond?) (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Call value

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter11: Bond Pricing And Amortization (bonds)

Section: Chapter Questions

Problem 3R

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