2. For a callable bond, the issuer has the right to "call" back the bond (that is to redeem the value several years after the issue date and before the original redemption date) early from its owner....

Extracted text: 2. For a callable bond, the issuer has the right to "call" back the bond (that is to redeem the value several years after the issue date and before the original redemption date) early from its owner. A $1000 par value bond with coupons at 10% payable semiannually was called for redemption at $1200 prior to maturity. The bond was bought for $920 immediately after a coupon payment and was held to call at year n before the original redemption date. The nominal yield rate convertible semiannually was 10%. Use the base amount formula to calculate n-the number of years the bond was held to the nearest integer (similar to # 27 of 6.7).