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Based on the following information concerning Bank Ones bonds: Par value: $1,000 Years to maturity: 15 years Coupon rate: 8% paid semiannually Beta: 0.1 Risk-free
Based on the following information concerning Bank Ones bonds: Par value: $1,000 Years to maturity: 15 years Coupon rate: 8% paid semiannually Beta: 0.1 Risk-free rate: 4% Market risk premium: 5% What is the expected price of the bond in 5 years? You believe that the risk free rate then will remain at 4% but the market risk premium is like to rise to 10% due to a worsening economic outlook. Select one: a. $1,256.86 b. $1,233.84 c. $1,274.01 d. $1,282.64 e. $1,263.87
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