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Please do A, B and C 4. This question is not cumulative (a) The current market wide interest rate is 7 percent. The price of
Please do A, B and C
4. This question is not cumulative (a) The current market wide interest rate is 7 percent. The price of a 6year coupon bond with $1,000 par value, semi-annual coupon payments, is $830.89. How much is the coupon rate of this bond? (b) A company wants to issue new 10-year bonds. The company currently has 6 percent coupon bonds on the market that sell for $1,038, make semiannual payments, and mature in 15 years. What coupon rate should the company set on its new semiannual bonds if it wants them to sell at par? (For YTM, you need to write down the expression for YTM and then use a spreadsheet program or a financial calculator to do this question.) Suppose you purchase a 30 -year, zero-coupon bond with a yield to maturity of 6%. You hold the bond for five years before selling it. If the market interest rates are 4% when you sell it, What are the prices of this bond when you buy it and sell it? How much money have you gained or lost? What is your annual holding period returnStep by Step Solution
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