In 2016, AT&T issued 10-year bonds with a coupon that pays $93.75 annually. At the time of issue, the bonds sold at par. Today, bonds of similar risk and maturity must pay an annual coupon of 7.25% to sell at par value. Assuming semi-annual payments and a 7.25% yield to maturity, what is the current price of the firm’s bonds?
In 2016, AT&T issued 10-year bonds with a coupon that pays $93.75 annually. At the time of issue, the bonds sold at par. Today, bonds of similar risk and maturity must pay an annual coupon of 7.25% to sell at par value. Assuming semi-annual payments and a 7.25% yield to maturity, what is the current price of the firm’s bonds?
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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In 2016, AT&T issued 10-year bonds with a coupon that pays $93.75 annually. At the time of issue, the bonds sold at par. Today, bonds of similar risk and maturity must pay an annual coupon of 7.25% to sell at par value. Assuming semi-annual payments and a 7.25% yield to maturity, what is the current price of the firm’s bonds?
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