In December 2015, Alpha Technologies PLC issued coupon bonds with par value 100. The coupon rate is
Question:
In December 2015, Alpha Technologies PLC issued coupon bonds with par value £100. The coupon rate is 8 percent annually and the bonds will be redeemed at par value in December 2020. What is the price of the bond if the competitive market interest rate is 10 percent? How would your answer change if the coupons were paid semi-annually?
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Step by Step Answer:
To calculate the price of the bond we can use the present value formula for a bonds cash flows The f...View the full answer
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Related Book For 
Foundations Of Finance
ISBN: 9781292318738
10th Global Edition
Authors: Arthur Keown, John Martin, J. Petty
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