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John buys 10 FCL bonds at PAR value ($1,000 each) with a coupon rate of...

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Finance

John buys 10 FCL bonds at PAR value ($1,000 each) with a coupon rate of 8%, paid 2% per quarter. The bonds are callable with a call premium of 5% of the face amount.

On March 31st, exactly of a year later, FCL calls the bonds even though there are 20 years remaining to maturity. At the time the bonds are called, the Yield-To-Maturity has dropped to 7%.

HPR = $

HPR = % (be sure to annualize your calculation)

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