Tinker Spy Corp. has a high-yield junk bond with the following features: Principal $1,000 Coupon 0% for
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Tinker Spy Corp. has a high-yield junk bond with the following features:
Principal $1,000 Coupon 0% for years 1 through 5 and 10% for years 6 through 10 Maturity 10 years The current interest rate on comparable debt is 10 percent. If you expect that the interest rate will be 8 percent five years from now, what is your potential gain or loss if your expectation is correct and interest rates are 8 percent after five years?
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