Problem 6-20 Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%. Assuming the yield to maturity remains constant, what is the price of the bond immediately after it makes its first coupon payment? Face value Yield to maturity Coupon rate Number of years Price immediately after first coupon $1,000.00 6% 7% 10
Problem 6-20 Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%. Assuming the yield to maturity remains constant, what is the price of the bond immediately after it makes its first coupon payment? Face value Yield to maturity Coupon rate Number of years Price immediately after first coupon $1,000.00 6% 7% 10
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 10P
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Transcribed Image Text:Problem 6-20
Suppose that General Motors Acceptance Corporation issued a
bond with 10 years until maturity, a face value of $1000, and a
coupon rate of 7% (annual payments). The yield to maturity on
this bond when it was issued was 6%.
Assuming the yield to maturity remains constant, what is the
price of the bond immediately after it makes its first coupon
payment?
Face value
Yield to maturity
Coupon rate
Number of years
Price immediately after first coupon
$1,000.00
6%
7%
10
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