Question
Lannister is planning to invest in a 10-year bond with a face value of $1,000 that pays a 8.5 percent coupon (paying semi-annually). Assume that
Lannister is planning to invest in a 10-year bond with a face value of $1,000 that pays a 8.5 percent coupon (paying semi-annually). Assume that coupon payments will be semi-annual. The current market rate for similar bonds is 10.4 percent. What is the maximum price that should be paid for this bond? Is the bond selling at a premium and why? (Round to 2 dp)
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Fundamentals Of Financial Management
Authors: James Van Horne, John Wachowicz
13th Revised Edition
978-0273713630, 273713639
