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A major auto manufacturer has experienced a market re evaluation lately due to a number of lawsuits. The firm has a bond issue outstanding with
A major auto manufacturer has experienced a market re evaluation lately due to a number of lawsuits. The firm has a bond issue outstanding with 15 years to maturity and a coupon rate of 8% (paid semiannually). The required rate on the companys bond has now risen to 16%. Face value is $1,000. At what price can these securities be purchased on the market? (Bond value estimation)
A. $1,273.26
B. $1,000.02
C. $7,782.99
D. $ 549.71
E. $ 450.31
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