Question
A company issued a 15 year debenture (unsecured bond) face amount $10 million at an initial coupon rate of 6.0%, payable semiannually, exactly 6 years
A company issued a 15 year debenture (unsecured bond) face amount $10 million at an initial coupon rate of 6.0%, payable semiannually, exactly 6 years ago. The bond is currently selling for 115. Please show how you arrived at answer.
- What is the current yield?
- The YTM?
- If the market rate of return (YTM) for bonds with comparable risk moves to 5.0%, what is the new price of this security?
- What will the bond pay at maturity per $1,000 face amount?
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Valuation Measuring And Managing The Value Of Companies
Authors: McKinsey & Company Inc., Tom Copeland, Tim Koller, Jack Murrin
3rd Edition
0471361909, 978-0471361909
