1. 12-1 Chapter 12 Callable Bonds

2. 12-2 Callable Bond Call price Par Time MaturityIssue date Freely callable Noncallable but redeemable

3. 12-3 Embedded Option

4. 12-4 Yield to Call

5. 12-5 Refinancing Benefit

6. 12-6 Timing of Refunding Points in time -P t + 2t + 1t +c Refund + B t Refund + B t + 1 Refund + B t + 2 Wait

7. 12-7 Coupon Savings in General Points in time 012… Old coupon C Old C Old C Old New coupon C New C New C New Savings C Old – C New C Old – C New C Old – C New

8. 12-8 Coupon Savings Example Points in time 012… Old coupon 101010 New coupon 777 Savings 333