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Example 6: A large chemical manufacturer has experienced a market re-evaluation lately due to the large number of lawsuits related to toxic waste. The firm

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Example 6: A large chemical manufacturer has experienced a market re-evaluation lately due to the large number of lawsuits related to toxic waste. The firm has a bond itxue outstanding. The S1000 par value issue has 15 years to maturity and a coupon of 8% with interest paid semi-annually. The required return on the bond has risen from 10% to 16%. What is the dollar loss to the bond holders? What is the percentage loss? Page 14

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