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Problem 1 0 - 1 5 ( Algo ) Effect of yield to maturity on bond price [ LO 1 0 - 2 , 1
Problem Algo Effect of yield to maturity on bond price LO Media Bias Incorporated issued bonds years ago at $ per bond. These bonds had a year life when issued and the annual interest payment was then percent. This return was in line with the required returns by bondholders at that point in time as described below: Assume that years later, due to good publicity, the risk premium is now percent and is appropriately reflected in the required return or yield to maturity of the bonds. The bonds have years remaining until maturity. Compute the new price of the bond. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Note: Do not round intermediate calculations. Round your final answer to decimal places. Assume interest payments are annual.
Problem Algo Effect of yield to maturity on bond price LO
Media Bias Incorporated issued bonds years ago at $ per bond. These bonds had a year life when issued and the annual
interest payment was then percent. This return was in line with the required returns by bondholders at that point in time as
described below:
Assume that years later, due to good publicity, the risk premium is now percent and is appropriately reflected in the required
return or yield to maturity of the bonds. The bonds have years remaining until maturity.
Compute the new price of the bond. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using
the formula and financial calculator methods.
Note: Do not round intermediate calculations. Round your final answer to decimal places. Assume interest payments are annual.
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