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Question 7 1 pts You have purchased a putable bond with maturity of 6 years...

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Accounting

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Question 7 1 pts You have purchased a putable bond with maturity of 6 years and coupon rate of 5.6% (interest paid annually). Yields can immediately change to 6.8% or 2.9% with equal likelihood, and once they change they will remain at that level forever. All rates are annualized assuming periodicity of 1 (i.e. annual compounding). You can put the bond back to the issuer immediately at a put price of 106. What is the fair price for this bond? (If your solution is $4.44 then enter "4.44" as the answer. Precision is 0.01+/- 0.02.)

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