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JRJ Corporation recently issued 10-year bonds at a price of $1,000. These bonds pay $60 coupon every six months. Their price has remained stable since
- JRJ Corporation recently issued 10-year bonds at a price of $1,000. These bonds pay $60 coupon every six months. Their price has remained stable since they were issued, i.e., they still sell for $1,000. Due to additional financing needs, the firm wishes to issue new bonds that would have a maturity of 10 years, a par value of $1,000, and pay $40 coupon every six months. If both bonds have the same yield to maturity, approximately how many shares of new bonds must JRJ issue to raise $2,000,000 cash?
- 2,400
- 2,596
- 3,050
- 5,000
- 4,275
- None of the above (state your answer)
- Xerox Corp. bonds bearing an annual coupon rate of 8%, pay coupons semiannually, have 10 years remaining to maturity, but callable in 2 years from now at $1,100. It is currently priced at $1,168.54 per bond. What is the Xerox Corp. annual yield to call?
A) 0.38%
B) 2.00%
C) 3.50%
D) 4.00%
E) 7.00%
F) None of the above (state your answer)
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