Bond price: Lopez Information Systems management is planning to issue 10-year bonds. The going market yield for

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Bond price: Lopez Information Systems management is planning to issue 10-year bonds. The going market yield for such bonds is 8.125 percent. Assume that coupon payments will be made semiannually.

Management is trying to decide whether to issue an 8 percent coupon bond or a zero coupon bond. Lopez needs to raise $1 million. What will be the price of an 8 percent coupon bond, and how many 8 percent coupon bonds will have to be issued? What will be the price of a zero coupon bond, and how many zero coupon bonds will have to be issued?

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Fundamentals Of Corporate Finance

ISBN: 9781119795438

5th Edition

Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates

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