Question
We are back limited (WAB) is evaluating their recently issued bonds. the bonds were issued january 1 2021 for a term of 41 years and
We are back limited (WAB) is evaluating their recently issued bonds. the bonds were issued january 1 2021 for a term of 41 years and will mature on december 31 2061. the bonds have a $1000 par value and will pay semi annual coupons at a rate of 8.5% per annum. The bonds are being evaluated in light of forecasted declines in interest rates. i) on what dates will the final four coupon payments be made (month, day and year). ii) what would be the value of the bonds on July 1, 2037, if the interest rates had risen to 12%? How would the bond be classified? iii) calculate the current yield and yield to maturity on the bonds on January 1, 2052, if they were selling for $680 at that time?
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