Do callable or pre-refunded zero-coupons really pay par when called?
I forgot about accretion. I am a duhmy. Zero coupons are called and the accreted value is paid out.
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Does this question belong here, or should it go on AM? I don't know if I am being dumb or this requires specialized knowledge.
If anyone has an answer please tell me what field/where you acquired this knowledge-there seems to be an opportunity here.
It's callable by the issuer. Your above scenario would never happen.
Zero Coupon bond duration = time to maturity, logically, even if it was callable at year 6, it wouldn't get called as there is no interest rate risk that the issuer can mitigate by calling then re-issuing at a lower rate to fund themselves via another debt offering.
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