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Your broker calls with an offer on a corporate bond that he feels is perfect for your portfolio. The bond has 7 years remaining to
Your broker calls with an offer on a corporate bond that he feels is perfect for your portfolio. The bond has 7 years remaining to maturity, semi-annual payments, and a coupon rate of 5.5%. Given todays yield curve, you estimate that the yield on a comparable Treasury security is 2.2%. What are the present values of the annuity stream, principal repayment, and the maximum value youd be willing to pay for the bond?
A) $368.60, $857.99 and $1,226.59
B) $368.60, $737.37 and $1,105.59
C) $355.02, $857.99 and $1,213.01
D) $355.02, $737.37 and $1,092.39
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