Homework answers / question archive / Why is a call provision advantageous to a bond issuer? When would the issuer be likely to initiate a refunding call?   An investor has two bonds in his portfolio that have a face value of $1,000 and pay an 11% annual coupon

Why is a call provision advantageous to a bond issuer? When would the issuer be likely to initiate a refunding call?   An investor has two bonds in his portfolio that have a face value of $1,000 and pay an 11% annual coupon

Finance

Share With

Why is a call provision advantageous to a bond issuer? When would the issuer be likely to initiate a refunding call?

An investor has two bonds in his portfolio that have a face value of $1,000 and pay an 11% annual coupon. Bond L matures in 12 years, while Bond S matures in 1 year. What will be the value of each bond be if the going interest rate is 6%?

Please send help. Thank you.