Question
1. Company A has a bond outstanding that pays a 7% coupon. The interest is paid semi-annually, and the bond matures in 10 years. If
1. Company A has a bond outstanding that pays a 7% coupon. The interest is paid semi-annually, and the bond matures in 10 years. If the market rate of interest on bonds of similar risk is 6.5%, what should company As bond be selling for today?
2. Company B has a bond outstanding that pays a 8% coupon. The interest is paid semi-annually, and the bond matures in 10 years. If the market rate of interest on bonds of similar risk is 6.5%, what should company Bs bond be selling for today? If the bond can be called at price 1050 in 8 years, what is its yield to call rate?
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Investments
Authors: Zvi Bodie, Alan J. Marcus, Alex Kane
6th Edition
0072861789, 9780072861785
