Firm A Face value- RM 1000000 Maturity- 10 years Coupon rate- 8% Market rate- 7% Redeem at 101% Firm B Face value- RM 1000000 Maturity- 10 years Coupon rate- 8% Market rate- 9% Redeem at Fair value Do amortisation table- effective rate for Firm A and Firm B with these elements: (Year, beginning amount, effective rate, coupon interest paid, discount amortisation and ending amount) Transaction cost = RM 45000

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
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Firm A

Face value- RM 1000000

Maturity- 10 years

Coupon rate- 8%

Market rate- 7%

Redeem at 101%

Firm B

Face value- RM 1000000

Maturity- 10 years

Coupon rate- 8%

Market rate- 9%

Redeem at Fair value

Do amortisation table- effective rate for Firm A and Firm B with these elements:

(Year, beginning amount, effective rate, coupon interest paid, discount amortisation and ending amount)

Transaction cost = RM 45000

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