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Excel Please Blue Co. plans to issue $10,000,000 of 20-year bonds in June. The bond will pay interest semiannually. It is now November, and the
Excel Please
Blue Co. plans to issue $10,000,000 of 20-year bonds in June. The bond will pay interest semiannually. It is now November, and the current cost of debt is 11%. The firm's financial manager concerns that interest rate will climb even higher in coming months. (Round your answer to two decimal places) 1. Assume the coupon rate on bond underlying futures contract is 6%. What is the implied interest rate on the bond ($100,000) futures contract that settled at 100160? (Pts. 32nds of 100%) 2. If interest rates increased by 2%, what would be the futures contract's new value? 3. How much has the futures contract's value changed after the interest rate increased? Blue Co. plans to issue $10,000,000 of 20-year bonds in June. The bond will pay interest semiannually. It is now November, and the current cost of debt is 11%. The firm's financial manager concerns that interest rate will climb even higher in coming months. (Round your answer to two decimal places) 1. Assume the coupon rate on bond underlying futures contract is 6%. What is the implied interest rate on the bond ($100,000) futures contract that settled at 100160? (Pts. 32nds of 100%) 2. If interest rates increased by 2%, what would be the futures contract's new value? 3. How much has the futures contract's value changed after the interest rate increasedStep by Step Solution
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