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5. A bond issued by Bombardier, a A-rated company, has a yield to maturity of 2.80%. This bond pays semi-annual coupons at a rate of
5. A bond issued by Bombardier, a A-rated company, has a yield to maturity of 2.80%. This bond pays semi-annual coupons at a rate of 2% (stated annually), has five years to maturity and has a face value of $100. The credit spread on A-rated bonds is currently equal to 1.30%. All rates are quoted as annual stated rates with semi-annual compounding. The price of a risk-free government bond with the same characteristics as that of Bombardier's is closest to: (2 points) A. $90.59 B. $96.29 C. $102.40 D. $104.61 E. $112.00
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The Handbook Of Investing In Todays Financial Markets
Authors: Alessandro De Cristofaro
1st Edition
1070350931, 978-1070350936
