Question
Please explain all anwers and which formula you used. 1.) LLY Corporation is planning to issue a $1,000 face value bond with a maturity of
Please explain all anwers and which formula you used.
1.) LLY Corporation is planning to issue a $1,000 face value bond with a maturity of 30 years. The annual coupon rate is expected to be 7.25% and interest payments are expected to be paid semi-annually. If the market is requiring a return of 10% annually on similar bonds, then what should LLY expect to receive for each bond they issue? Round to the nearest cent. Do not a dollar sign in your answer. (i.e. If your answer is $432.51, then type 432.51 without $ sign)
2.)You are purchasing a bond that currently sold for $985.63. it has the time-to-maturity of 10 years and a coupon rate of 6%, paid semi-annually. The bond can be called for $1,020 in 3 years. What is the yield to maturity of this bond? Round to the nearest hundredth percent. Do not include a percent sign in your answer. (i.e. If your answer is 4.32%, then type 4.32 without a % sign)
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