Question
Bank of America has a bond that pays a 6.5% coupon rate annually and matures in 5 years. If Chelly has a 4.3% required rate
Bank of America has a bond that pays a 6.5% coupon rate annually and matures in 5 years. If Chelly has a 4.3% required rate of return. What should she be willing to pay for the bond which has a $1,000 par value? What happens if she pays more or less than this amount?
*PLEASE FILL CELLS AS SHOWN IN EXCEL*
| Par |
| Coupon rate |
| Bond Term |
| Coupon PAYMENT |
| market rate premium |
| PV |
| rate |
| n |
| PMT |
| FV |
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Handbook Of The Economics Of Finance Corporate Finance Volume 1A
Authors: George M. Constantinides, M. Harris, Rene M. Stulz
1st Edition
0444513620, 978-0444513625
