Abc corporation has issued callable bonds that have 8, Ask an Expert

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ABC Corporation has issued callable bonds that have 8% annual coupon rate paid semianmally. Bonds could be redeemed starting from the end of year 2. The call premium equals the amount of the annual coupon. The bonds mature in 8 years, have a face value of $1000 and a yield to maturity of 10%. The economy is expected to plunge into recession. What is the value of these bonds if the investor considers a possibility of earlier redemption based on her expectations of interest rates?

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Financial Management, Finance

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