The bonds offered by Fast Moving Pumps are callable in 4 years at a quoted price of 101.5. What is the amount of the call premium on a $1,000 face value bond?

Question

Quizplus · Accepted Answer

The call premium is the amount above the face value that the issuer must pay to call the bond. A quoted price of 101.5 means 101.5% of the face value, so the call premium is 1.5% of $1,000, which is $15.00.

The Bonds Offered by Fast Moving Pumps Are Callable in 4