A company in a line of business similar to ABSA recently issued at par noncallable bonds with a coupon rate of 5.8% and a maturity of 20 years. The bonds were rated Aaa by Moody’s and AAA by Standard & Poor’s. What rate of return (yield to maturity) did investors require on these bonds if the bonds sold at par value?
A company in a line of business similar to ABSA recently issued at par noncallable bonds with a coupon rate of 5.8% and a maturity of 20 years. The bonds were rated Aaa by Moody’s and AAA by Standard & Poor’s. What rate of return (yield to maturity) did investors require on these bonds if the bonds sold at par value?
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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| For all questions, assume par value is R 1,000 and semiannual bond interest |
| payments. |
| a) A company in a line of business similar to ABSA recently issued at par |
| noncallable bonds with a coupon rate of 5.8% and a maturity of 20 years. The |
| bonds were rated Aaa by Moody’s and AAA by Standard & Poor’s. What rate of |
| return (yield to maturity) did investors require on these bonds if the bonds sold |
| at par value? |
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