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Belltower Associates is issuing a new D-rated, eight-year bond at a face value of $2,000.00 with a coupon rate of 26.7% APR. Coupons are paid
Belltower Associates is issuing a new D-rated, eight-year bond at a face value of $2,000.00 with a coupon rate of 26.7% APR. Coupons are paid at the end of every four month period. The yield to maturity of government bonds with a similar coupon payment frequency and similar time until maturity as Belltower Associates's new bond is 4.2% APR. Given the above information, which of the following is closest to the market price at which Belltower Associates will be able to issue their new bond? Assume that after evaluating other bonds in the market with a similar D credit rating, you expect Belltower Associates's new bond to trade with a credit spread of 16.8%. a. $2.372.88 O b. $4,692.73 O c. $2,480.27 O d. $2.548.99 Oe $2,437.28 O f. $2,435.83 Og $5,804.43 Oh. $4,662.53
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