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Three years ago, Leopoldo Corp. issued 6.5% coupon bonds with an original maturity of 20 years. These bonds pay semiannual coupons, and are currently trading
Three years ago, Leopoldo Corp. issued 6.5% coupon bonds with an original maturity of 20 years. These bonds pay semiannual coupons, and are currently trading at 110% of face value. (i) Calculate the yield to maturity of these bonds today. (ii) What would be the price of each of these bonds today if the yield on these bonds decreased by 50 basis points (0.5%) today? Assume a face value of $1000 per bond. (iii) If the yield on these bonds (calculated in part (1) above) is the same two years from now, what would each bond sell for at that time? Assume a face value of $1000
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