Problem #4: A corporation issues a 20 year bond with the final redemption value equal to the face value of $1000, and semiannual coupons of 11.5%. However, the bond is callable at the end of 10 years at $1100, and at the end of 15 years at $1040. What is the price of the bond if the investor's yield (the "yield-to-worst") is 8.5%? Problem = 4: Answer correct to 2 decimals.
Problem #4: A corporation issues a 20 year bond with the final redemption value equal to the face value of $1000, and semiannual coupons of 11.5%. However, the bond is callable at the end of 10 years at $1100, and at the end of 15 years at $1040. What is the price of the bond if the investor's yield (the "yield-to-worst") is 8.5%? Problem = 4: Answer correct to 2 decimals.
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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Problem #4: A corporation issues a 20 year bond with the final redemption value equal to the face value of $1000, and
semiannual coupons of 11.5%. However, the bond is callable at the end of 10 years at $1100, and at the end of 15
years at $1040. What is the price of the bond if the investor's yield (the "yield-to-worst") is 8.5%?
Problem #4
Answer correct to 2 decimals.
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