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Last year, the company issued a 4-year bond with a $1,000 face value and $30 annual coupon (paid semiannually). Upon the issuance, the bond was
Last year, the company issued a 4-year bond with a $1,000 face value and $30 annual coupon (paid semiannually). Upon the issuance, the bond was traded exactly at the price of $1,000.00. Between last year and this year, the following happened (a) the company's default spread stayed the same (b) US inflation expectation for the time the bond will be issued increased from 0.5% per year to 4.5% per year. The current price of the bond must be?
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