1. Aboitiz Equity Ventures issued a 7-year bond with a par value of ₱50,000 that pays a coupon of 8.47%. Coupon payments will be made annually. Investors required rate of return is composed of: real risk free rate of 1.5%; inflation premium of 4.5%; default risk premium of 2%; liquidity premium of 1.5%; and maturity risk premium of 2%. The required rate of return would be? 2. Using information in #1, the price of the bond would be closest to? 3. Using information in numbers 1, assume that the price of the bond is ₱45,000. The approximate yield to maturity would be?
1. Aboitiz Equity Ventures issued a 7-year bond with a par value of ₱50,000 that pays a coupon of 8.47%. Coupon payments will be made annually. Investors required rate of return is composed of: real risk free rate of 1.5%; inflation premium of 4.5%; default risk premium of 2%; liquidity premium of 1.5%; and maturity risk premium of 2%. The required rate of return would be? 2. Using information in #1, the price of the bond would be closest to? 3. Using information in numbers 1, assume that the price of the bond is ₱45,000. The approximate yield to maturity would be?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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1. Aboitiz Equity Ventures issued a 7-year bond with a par value of ₱50,000 that pays a coupon of 8.47%. Coupon payments will be made annually. Investors required
2. Using information in #1, the price of the bond would be closest to?
3. Using information in numbers 1, assume that the price of the bond is ₱45,000. The approximate yield to maturity would be?
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