Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company issued a bond in 30 June of year N. You have the following information about this bond: it was issued at par

 




A company issued a bond in 30 June of year N. You have the following information about this bond: it was issued at par (50); it has an interest rate of 6%; it will be repaid in 30 June of N+5 and the annual coupon is paid in 30 June each year. On 2/01/N+2 an investor decided to buy this bond. Consider that the YTM for bonds with equivalent risk is 8%. Assume that each month has 30 days. Requests: 1. Calculate the theoretical value of the bond in 2/01/N+2. 2. Calculate the theoretical value of the bond in 2/01/N+2, assuming the following change regarding the repayment of the bond: the repayment is done at par, by change, half of the bonds in 30/06/N+4 and the remaining in 30/06/N+5.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

To calculate the theoretical value of the ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Analysis for Financial Management

Authors: Robert Higgins

11th edition

77861787, 978-0077861780

More Books

Students also viewed these Finance questions