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Please answer all the questions listed thanks. 1) Two corporate bonds (from two different issuers) with notional $1000 and 3% and 7% coupon paid annually
Please answer all the questions listed thanks.
1) Two corporate bonds (from two different issuers) with notional $1000 and 3% and 7% coupon paid annually at year 1, 2, 3, 4 and 5, have 5 year remaining before they mature. The current risk free discount curve is 2% flat, annual compounding. (1) what is the present value of these bonds under the risk free discount curve? (2) The 3% bond is traded at $817.94, the 7% bond is traded at $989.82, what are their internal yield of return (YTM)? (3) Can you speculate what happened to the two companies since they issued their bonds? 1) Two corporate bonds (from two different issuers) with notional $1000 and 3% and 7% coupon paid annually at year 1, 2, 3, 4 and 5, have 5 year remaining before they mature. The current risk free discount curve is 2% flat, annual compounding. (1) what is the present value of these bonds under the risk free discount curve? (2) The 3% bond is traded at $817.94, the 7% bond is traded at $989.82, what are their internal yield of return (YTM)? (3) Can you speculate what happened to the two companies since they issued their bondsStep by Step Solution
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