Given the following information: Current Interest Rate is 5% There are 3 different...
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Finance
Given the following information:
Current Interest Rate is 5%
There are 3 different scenarios:
Interest Rate can stay the same at 5% with probability 1/3
or increase to 6% with probability 1/3
or decrease to 4% with probability 1/3
Bond's information:
Maturity is 8 years
Coupon is 5%, paid annually
Par value is $1,000
Call Price is $1,050
what is the price of the callable bond? (Round to 2 decimal places)
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