Question
Guanabana Studio issued 15-year bonds to the public exactly three months ago. These bonds would pay semi-annual coupons at a rate of 13% p.a. The
Guanabana Studio issued 15-year bonds to the public exactly three months ago. These bonds would pay semi-annual coupons at a rate of 13% p.a. The rate of return required by investors on these instruments has been estimated at 10% p.a. Each bond has a face value of $200,000.
Calculate todays price of each bond.
Consider the current term structure as follows: corporate bonds with maturity from 1 years to 5 years yield 8% p.a., corporate bonds with maturity from 6 years to 9 years yield 9% p.a., and 10-year bonds and longer-maturity bond yield 12% p.a. Recalculate todays price of each bond.
Please answer in the next couple days.
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