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Q1 firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 79 basis points 0.79%). Your
Q1 firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 79 basis points 0.79%). Your firm's five-year has semi-annual coupons and a coupon rate of 6%. You see that new five-year Government of Canada bonds are being issued with a YTM of 2%. What should the price of your outstanding five-year bonds be? Assume a par value $100.
Q2 Suppose a five-year, $1,000 bond with annual coupons has a price of $900.74 and a yield to maturity of 5.5%. What is the bond's coupon rate?
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