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Answer for question #4 please Jason Greg is a recent retiree who is interested in investing some of his savings in corporate bonds. Listed below
Answer for question #4 please
Jason Greg is a recent retiree who is interested in investing some of his savings in corporate bonds. Listed below are the bonds he is considering adding to his portfolio.
- Bond A has a 7.5% semiannual coupon, matures in 12 years, and has a $1,000 face value.
- Bond B has a 10% semiannual coupon, matures in 12 years, and has a $1,000 face value.
- Bond C has an 11.5% semiannual coupon, matures in 12 years, and has a $1,000 face value.
Each bond has a YTM of 10%.
- Before calculating the prices of the bonds, indicate whether each bond is trading at a premium, discount, or par.
- Calculate the price of each of these bonds.
- Calculate the current yield for each bond.
- If the yield to maturity for each bond remains at 9%, what will be the price of each bond 2 years from now?
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