Question
Please answer throughly through excel please Security: AAA Corporate AA Corporate A Corporate BBB Corporate BB Corporate Yield (%): 6.2 6.4 6.7 7.0 7.5 Consolidated
Please answer throughly through excel please
Security: | AAA Corporate | AA Corporate | A Corporate | BBB Corporate | BB Corporate |
Yield (%): | 6.2 | 6.4 | 6.7 | 7.0 | 7.5 |
Consolidated Insurance wants to raise $35 million in order to build a new headquarters. The company will fund this by issuing 10-year bonds with a face value of $1,000 and a coupon rating of 6.5%, paid semi-annually. The above table shows the yield to maturity for similar 10-year corporate bonds of different ratings. Which of the following is closest to how many more bonds Consolidated Insurance would have to sell to raise this money if their bonds received an A rating rather than an AA rating?
- (5 marks) Suppose that a zero-coupon bond has a face value of $10,000 and 5 years to maturity. If the YTM is 7.2%, at what price will this bond be traded?
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