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Extremely confused, please help. Thank you! PetSmart has the following two bonds outstanding that you are considering adding to your portfolio. PetSmart 9.625% bonds maturing
Extremely confused, please help. Thank you!
PetSmart has the following two bonds outstanding that you are considering adding to your portfolio. PetSmart 9.625% bonds maturing on 4/30/30 trade at a price of 101.5% and PetSmart 8.875% bonds maturing on 12/1/29 trading at a price of 103.5%. Assume the PetSmart 9.625% coupon bonds noncallable while the 8.875% bonds have a put in 1 year at par. What might be your expected returns on the bonds if yields stay the same, go up 100 bp, or go down 100 bp. Discuss any assumptions you needed to make for your calculations and additional advantages of either position. Graph your results. PetSmart has the following two bonds outstanding that you are considering adding to your portfolio. PetSmart 9.625% bonds maturing on 4/30/30 trade at a price of 101.5% and PetSmart 8.875% bonds maturing on 12/1/29 trading at a price of 103.5%. Assume the PetSmart 9.625% coupon bonds noncallable while the 8.875% bonds have a put in 1 year at par. What might be your expected returns on the bonds if yields stay the same, go up 100 bp, or go down 100 bp. Discuss any assumptions you needed to make for your calculations and additional advantages of either position. Graph your resultsStep by Step Solution
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