Consider a $ par corporate bond with a annual coupon and exactly three years until
maturity that is both callable and putable according to the following schedule:
Callable in year at of par; callable in year at of par
Putable any time starting in year at par
Assume that both the call and put options will be exercised if it is at all profitable to do so
Using a threeperiod binomial pricing model with the following interest rate tree, compute the value
of the bond. pointsConsider a $ par corporate bond with a annual coupon and exactly three years until
maturity that is both callable and putable according to the following schedule:
Callable in year at of par; callable in year at of par
Putable any time starting in year at par
Assume that both the call and put options will be exercised if it is at all profitable to do so
Using a threeperiod binomial pricing model with the following interest rate tree, compute the value
of the bond. points
