Question
Assume today is June 1, 2023 and that all bonds pay interest annually with a face value of $1,000. YTM = Current yield + Capital
Assume today is June 1, 2023 and that all bonds pay interest annually with a face value of $1,000. YTM = Current yield + Capital Gains yield; CY = Annual Interest/Current Price Apple is AA rated; AAA Treasuries yield 1-year is 2.75%, 10-year 3.25% 2 Years ago, Apple issued 2.0% coupon paying bonds with a face value of $1000 set to mature on June 1, 2033. The bonds are callable in 1 year at 1050. Inflationary concerns have forced central bankers to raise interest rates globally. What would happen to the price of the bond if Apple became the subject of a liability issue where it hypothetically gets sued for $250 billion? Show your work.
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