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Here are data on $1,000 par value bonds issued by Microsoft, GE Capital, and Morgan Stanley. Assume you are thinking about buying these bonds.
Here are data on $1,000 par value bonds issued by Microsoft, GE Capital, and Morgan Stanley. Assume you are thinking about buying these bonds. Answer the following questions: a. Assuming interest is paid annually, calculate the values of the bonds if your required rates of return are as follows: Microsoft, 5 percent; GE Capital, 8 percent; and Morgan Stanley, 10 percent; where: b. The bonds are selling for the following amounts: Microsoft GE Capital Morgan Stanley $758 $1,152 $738 What are the expected rates of return for each bond? c. How would the value of the bonds change if (1) your required rate of return (r) increased 2 percentage points or (2) a. If your required rate of return on the Microsoft bond is 5 percent, what is the value of the bond? (Round to the nearest cent.) Data table - inal check Etext pag (Click on the following icon in order to copy its contents into a spreadsheet.) Coupon interest rate Years to maturity MICROSOFT 6.75% 23 GE CAPITAL 5.75% 18 MORGAN STANLE 6.25% 5
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