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5) The Kamagi Corp. sold thirty year bonds ten years ago (i.e., the market considers these bonds to be 20 year bonds today). The bonds
5) The Kamagi Corp. sold thirty year bonds ten years ago (i.e., the market considers these bonds to be 20 year bonds today). The bonds have a 7% coupon, pay interest semiannually, and have a par value of $1,000. Investors would require a 6.8% annual rate of return (i.e., YTM), compounded semiannually, on a twenty year loan to Kamagi today (i.e., presumably interest rates have come down a bit since the bonds were first issued). a) What is the annual amount of interest paid on each Camaggi bond? b) What is the price today (to the nearest penny) of the Camaggi bonds? c) What is the current yield (to two decimal places) on the Camaggi bonds
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