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answer 3,4,5 only 1. Suppose Galaxy Corp. has a bond issue ($1,000 face value) that pays a coupon of 4% per year. The bond matures
answer 3,4,5 only
1. Suppose Galaxy Corp. has a bond issue ($1,000 face value) that pays a coupon of 4% per year. The bond matures in 20 years. What is the value of the bond? Po = 2.Now, suppose in the second year, (how many years to maturity?), interest rates on a similar type of bond increases to 5%. What is the value of the bond? Po= 3.Next, after another year, with the market rate still at 5%, what will be the value of the bond? Po = 4.Calculate the one-year holding period return between 2 and 3? 5.Going back to the scenario in #1 above, suppose the interest rates fall to 3% the year after Galaxy bonds were issued. What would this do to the value of Galaxy's bonds Step by Step Solution
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