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Develop and present a valuation model for corporate debt with a face value of $100 million dollars. The model should use hypothetical assumptions for the
- Develop and present a valuation model for corporate debt with a face value of $100 million dollars. The model should use hypothetical assumptions for the coupon rate and other characteristics as well as a hypothetical market interest rate. You must also select a maturity for the bonds and the frequency of the coupon payments. The market rate should be justifiable/reasonable given current market conditions. Explain why the model will be important for the issuance process that is being considered.
- Explain how the market rate you chose will be dependent upon the maturity. Describe what you believe to be the most persuasive theory associated with the shape of market interest rates across the maturity spectrum (i.e., the yield curve).
- Comment on how the different bond characteristics would influence the valuation of the bond. Provide illustrations in a summary table format for how the value might adjust for call provisions and sinking funds.
the first part must include numerical illustrations and tables.
This is everything we were given, and i am very confused about how to even approach this.
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