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Business, 13.11.2019 17:31 ronniethefun

Lo3 bond features maturity (years) 5 face value = $1,000 coupon rate = 7.00% coupon dates (annual) market interest rate today 7.00% time to call (years) 3 price if called $1,070.00 market interest rate in year 3 5.00% the above bond is callable in 3 years. when the bond is issued today, interest rates are 7.00% . in 3 years, the market interest rate is 5.00% . should the firm call back the bonds in year 3 and if so, how much would the firm save or lose by calling back the bonds? group of answer choices yes it should call back the bonds, it will save $31.17 yes it should call back the bonds, it will save $32.81 yes it should call back the bonds, it will save $33.80 no it should not call back the bonds, it will lose $33.80 no it should not call back the bonds, it will lose $31.17 no it should not call back the bonds, it will lose $32.81

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