Question
ABC's has an outstanding bond with a coupon rate of 5.5 percent that matures in 12 years. The bond pays interest semiannually. If the face
ABC's has an outstanding bond with a coupon rate of 5.5 percent that matures in 12 years. The bond pays interest semiannually. If the face value of the bond is $1,000 face value and the yield to maturity is 7.13 percent, find the following "Show your formula and calculations":
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a- Is this bond issued at discount, premium, or at par? Why?
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b- What is the value of the bond at the date of issuance?
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c- What is the capital gain yield in the first year? Show your calculation
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d- What is the selling price of this bond after two years from the date of issuance? Show your formula/calculation/explanation!
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