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Smithson Co.'s Class A bonds have 10 years to go until maturity. They have a $1,000 face value and carry coupon rates of 8%. Approximately
Smithson Co.'s Class A bonds have 10 years to go until maturity. They have a $1,000 face value and carry coupon rates of 8%. Approximately what do the bonds yield at the following prices Assume bond coupons are paid semiannually. Round the answers to the nearest whole percentage. $770 % $875 % $1,000 % The problem refers to the bonds of The Apollo Corporation, all of which have a call feature. The call feature allows Apollo to pay off bonds anytime after the first 15 years, but requires that bondholders be compensated with an extra year's interest at the coupon rate if such a payoff is exercised. Apollo's Alpha bond was issued 10 years ago for 30 years with a face value of $1,000. Interest rates were very high at the time, and the bond's coupon rate is 20%. The interest rate is now 14.5%. Assume bond coupons are paid semiannually. At what price should an Alpha bond sell Round the answer to the nearest cent. $ At what price would it sell without the call feature Round the answer to the nearest cent. $
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