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Question 35 (5 points) You are considering purchasing a HSBC 5.4 of 2028. The yield (prevailing rate) on similar risk bonds issued today (2020) is
Question 35 (5 points) You are considering purchasing a HSBC 5.4 of 2028. The yield (prevailing rate) on similar risk bonds issued today (2020) is 6.6% compounded semi-annually and coupon payments are received semi-annually. The next coupon payment will be received in 6 months. a. What is the value of each coupon payment? b. What is the current value of the coupon payments? c. What is the current value of the face value? d. What would you be willing to pay today for this bond? e. Identify whether you have bought the above bond at a premium or a discount and explain what has happened to cause the price to change in this way
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