Question
Bond Valuation Tri-Mount Systems has a long term debt obligation outstanding. The debenture has a 6 3/8% coupon and has 22 years to maturity on
Bond Valuation
Tri-Mount Systems has a long term debt obligation outstanding. The debenture has a 6 3/8% coupon and has 22 years to maturity on the next semi-annual anniversary date. The anniversary date is July 1.
The anniversary date is 47 days from now.
- The market for debt instruments of this risk requires a 7% return. What are the clean and dirty prices of this debenture?
- One year has passed and the market yield has stayed at 7%; you sell the bond at the market price. What dollar amount did you earn and what HPY (holding period yield) did you earn?
- One year passed from initial purchase and the market yield is now 8%; you sell the bond at the market price. What dollar amount did you earn and what HPY (holding period yield) did you earn?
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Finance Applications And Theory
Authors: Marcia Cornett, Troy Adair, John Nofsinger
1st Edition
0073382256, 9780073382258
