Question
Appelat Co. has a 10 year, $1,000 face value bond outstanding with 7% coupon rate. The market rate of return on similar risk bonds is
| Appelat Co. has a 10 year, $1,000 face value bond outstanding with 7% coupon rate. The market rate of return on similar risk bonds is 10%. What is the value of bond today? |
| $1,113.00
| ||
| $815.66 | ||
| $1,000 | ||
| $634.73 |
What is this bond's next year's price?
| $1,000 | ||
| $906.56 | ||
| $827.23 | ||
| $1,166.67 |
Is this bond a par bond, a discount bond, or a premium bond? Why? What is the reason this is happening?
What are the current, the capital gain yield and the total yield for this bond.
What happens to the price of this bond the closer we get to its maturity? What would be the price of this bond at its maturity?
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Cost Benefit Analysis
Authors: Harry F. Campbell, Richard P.C. Brown
3rd Edition
1032320753, 9781032320755
