Problem 1 Dundee Inc. bonds are currently selling for $1,250. They pay an annual coupon of $90, have a maturity of 25 years and a face value of $1,000, but can be redeemed in 5 years at $1,050. What is the difference between the YTM of this bond and its YTC? Problem 2 Gross Nickle Corporation issued 20-year 7.5% annual coupon bonds at $1,000 face value a year ago. Today, the YTM of these bonds is 5.5%. What is the current price of the 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
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Problem 1
Dundee Inc. bonds are currently selling for $1,250. They pay an annual coupon of $90, have
a maturity of 25 years and a face value of $1,000, but can be redeemed in 5 years at $1,050.
What is the difference between the YTM of this bond and its YTC?
Problem 2
Gross Nickle Corporation issued 20-year 7.5% annual coupon bonds at $1,000 face value a
year ago. Today, the YTM of these bonds is 5.5%. What is the current price of the bonds?
Transcribed Image Text:Problem 1 Dundee Inc. bonds are currently selling for $1,250. They pay an annual coupon of $90, have a maturity of 25 years and a face value of $1,000, but can be redeemed in 5 years at $1,050. What is the difference between the YTM of this bond and its YTC? Problem 2 Gross Nickle Corporation issued 20-year 7.5% annual coupon bonds at $1,000 face value a year ago. Today, the YTM of these bonds is 5.5%. What is the current price of the bonds?
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