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(a) Consider a 10-year par bond yielding 5%. How much of the bond's value comes from principal and how much from coupon payments? How
(a) Consider a 10-year par bond yielding 5%. How much of the bond's value comes from principal and how much from coupon payments? How does your answer change for a 30-year par bond yielding 5%? (b) Why would anyone buy a bond selling at a premium when after holding that bond to maturity it will be worth only par?
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a For a 10year par bond yielding 5 the bonds value is equal to its face value In this case since it is a par bond the bonds value comes entirely from ...
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Financial Management Theory and Practice
Authors: Eugene F. Brigham, Michael C. Ehrhardt
15th edition
130563229X, 978-1305632301, 1305632303, 978-0357685877, 978-1305886902, 1305886909, 978-1305632295
