A) You have just purchased a 17-year, $1,000 par value bond. The annual coupon rate on this bond is 10.9 percent paid each 6 months. If you expected to earn the market rate of 14.8 as return on this bond, how much did you pay for it?\ B) JRJ Corporation recently issued 10-year bonds at a price of $1,000. These bonds pay $88 in interest each six months. Their price has remained stable since they were issued, i.e., they still sell for $1,000. Due to additional financing needs, the firm wishes to issue new bonds that would have a maturity of 16 years, a par value of $1,000, and pay $68 in interest every six months. If both bonds have the same yield, how many new bonds must JRJ issue to raise $2,000,000 cash?(round your answer)
Please answer Part A-B and included a short explanation of how you arrived at your answer for each part.
A) You have just purchased a 17-year, $1,000 par value bond. The annual coupon rate on this bond is 10.9 percent paid each 6 months. If you expected to earn the market rate of 14.8 as return on this bond, how much did you pay for it?\
B) JRJ Corporation recently issued 10-year bonds at a price of $1,000. These bonds pay $88 in interest each six months. Their price has remained stable since they were issued, i.e., they still sell for $1,000. Due to additional financing needs, the firm wishes to issue new bonds that would have a maturity of 16 years, a par value of $1,000, and pay $68 in interest every six months. If both bonds have the same yield, how many new bonds must JRJ issue to raise $2,000,000 cash?(round your answer)
C) Trickle Corporation's 21 percent coupon rate, semiannual payment, $1,000 par value bonds which mature in 24 years. The bonds currently sell for $1,230.51 in the market. What is the bond Yield-to-Maturity (YTM) ?
D) A $1,000 par value bond sells for $1,216. It matures in 20 years, has a 48 percent coupon, pays interest semiannually, and can be called in 5 years at a price of $1195. What is the bond's Yield -to-Call?
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