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After extensive project appraisal analysis, McCoy Plc has decided to go ahead with the launch of a new gaming platform. The new project will cost £400m and McCoy Plc has decided to raise half of this by issuing bonds. The new bonds were issued today and have a maturity of 6 year, a face value of £100 and a coupon rate of 6%. a) If the bonds were issued at a fair price and the yield to maturity on the bonds is 7.5%, how many bonds did McCoy Plc have to issue? b) What was the duration of the bonds on the day they were launched?

After extensive project appraisal analysis, McCoy Plc has decided to go ahead with the launch of a new gaming platform. The new project will cost £400m and McCoy Plc has decided to raise half of this by issuing bonds. The new bonds were issued today and have a maturity of 6 year, a face value of £100 and a coupon rate of 6%. a) If the bonds were issued at a fair price and the yield to maturity on the bonds is 7.5%, how many bonds did McCoy Plc have to issue? b) What was the duration of the bonds on the day they were launched?

Essentials Of Investments
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
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After extensive project appraisal analysis, McCoy Plc has decided to go ahead with the launch of a new gaming platform. The new project will cost £400m and McCoy Plc has decided to raise half of this by issuing bonds. The new bonds were issued today and have a maturity of 6 year, a face value of £100 and a coupon rate of 6%. a) If the bonds were issued at a fair price and the yield to maturity on the bonds is 7.5%, how many bonds did McCoy Plc have to issue? b) What was the duration of the bonds on the day they were launched?
Transcribed Image Text:After extensive project appraisal analysis, McCoy Plc has decided to go ahead with the launch of a new gaming platform. The new project will cost £400m and McCoy Plc has decided to raise half of this by issuing bonds. The new bonds were issued today and have a maturity of 6 year, a face value of £100 and a coupon rate of 6%. a) If the bonds were issued at a fair price and the yield to maturity on the bonds is 7.5%, how many bonds did McCoy Plc have to issue? b) What was the duration of the bonds on the day they were launched?
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