Question
Assume that coupon interest payments are made semiannually and that par value is $1,000 for both bonds. Bond A Bond B Coupon rate 5.00% 5.00%
Assume that coupon interest payments are made semiannually and that par value is $1,000 for both bonds.
| Bond A | Bond B | |
| Coupon rate | 5.00% | 5.00% |
| Time to maturity | 5 years | 25 years |
| Required return | 7.37% | 7.37% |
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| ||
a. Calculate the values of Bond A and Bond B. (Round your answers to 2 decimal places.)
| Bond value A | $ |
| Bond value B | $ |
|
| |
b. Recalculate the bonds values if the required rate of return changes to 9.40%. (Round your answers to 2 decimal places.)
| Bond value A | $ |
| Bond value B | $ |
|
| |
c. Calculate the increase or decrease in bond value based on the change in required return. (Round your answers to 2 decimal places.)
| Bond value A (Click to select)increasedecrease | $ |
| Bond value B (Click to select)increasedecrease | $ |
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Quantitative Corporate Finance
Authors: John B. Guerard Jr. Anureet Saxena, Mustafa Gultekin
2nd Edition
3030435466, 978-3030435462
