Question
You are working at the investment bank Gold in Sacks. The table below shows the current STRIPS prices that appear on your computer screen.
You are working at the investment bank "Gold in Sacks". The table below shows the current STRIPS prices that appear on your computer screen. In the table. "Bond Price" is the price for a STRIP that pays $100 on the Maturity Date. Maturity (years) 1 2 3 4 Bond Price (B) $97.94 $94.31 $89.84 $85.19 An associate at another major investment bank has a number of default free 5% coupon bonds with annual coupons and face value $1,000. These bonds mature in exactly four years from today (i.e. there are four remaining coupon payments). She calls you and offers to sell 10,000 of these bonds. What is the fair price for each of these bonds today?
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
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