Question
Ten years ago, the Suma Co. issued a series of 20-year bonds with a $1,000 par value. The bonds carry a coupon rate of 5%,
Ten years ago, the Suma Co. issued a series of 20-year bonds with a $1,000 par value. The bonds carry a coupon rate of 5%, paid semi-annually. Assume that the required rate of return on similar bonds today is 3%.
a) What is the current market price of the bond? Show all calculations.
b) What will be the bond's annual coupon yield, current yield and yield-to-maturity.
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Investments Analysis and Management
Authors: Charles P. Jones
12th edition
978-1118475904, 1118475909, 1118363299, 978-1118363294
