Reference no: EM132467641

Your firm issued 10-year bonds that are callable in 5 years. Thus, your firm has the right to call the debt in five years. In return for the call feature, your firm is paying a higher coupon rate than if the issue were non-callable. Given recent asset acquisitions, you believe the call feature is superfluous combined synthetic non-callable bond achieves the objective to monetize the embedded call and wish to monetize it today. Though the bonds are not currently callable,

Problem 1: How you could convert the existing callable bond into a synthetic non-callable bond.