The callable annuity rate can be calculated as:
A) × Hurdle Rate
B) × Hurdle Rate
C) × Cost of Capital

Name: The callable annuity rate can be calculated as: A) × Hurdle Rate B) × Hurdle Rate C) × Cost of Capital
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Question

The callable annuity rate can be calculated as:
A) × Hurdle Rate 
B) × Hurdle Rate 
C) × Cost of Capital

Quizplus · Accepted Answer

The callable annuity rate is usually calculated as the coupon rate of the bond minus any call premium divided by the price of the bond. In this case, the formula given in option B is the closest to this calculation, where the hurdle rate is similar to the cost of capital.

The Callable Annuity Rate Can Be Calculated As