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Suppose Sam wants to earn a return of 14.00 percent and is offered the opportunity to purchase a $1,000 par value bond that pays a
Suppose Sam wants to earn a return of 14.00 percent and is offered the opportunity to purchase a $1,000 par value bond that pays a 12.25 percent coupon rate (distributed semiannually) and has three years remaining to maturity. Use the following table to fill in values for the bond's coupon payment and present value, and Sam's semiannual required rate of return for this investment. Variable Name Variable Value Coupon Payment Semiannual Required Rate of Return Present Value Now, suppose Sam wants to earn a return of 12.25 percent, but the bond being considered for purchase offers a coupon rate of 12.25 percent. It is a $1,000 par value bond that pays a 12.25 percent coupon rate (distributed semiannually) and has three years remaining to maturity. The bond's present value is which is its par value, which means that the bond is Given your calculations and conclusions, which of the following statements are true? Check all that apply. When the coupon rate is equal to Sam's required return, the bond should trade at par. When the coupon rate is equal to Sam's required rate of return, the bond should trade at a premium. When the coupon rate is less than Sam's required rate of return, the bond should trade at a premium. When the coupon rate is less than Sam's required rate of return, the bond should trade at a discount
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