q1. Alphabet Pty recently issued 25 million bonds with a face value of $8,000 each. The coupon rate of the bonds is 7% p.a., paid semi-annually. The bonds have a maturity of 150years, and bonds of similar risk pay a yield to maturity of 5% p.a. semi-annually. For what price does each bond sell currently? Enter your answer to the nearest cent (two decimal places). q2.If the yield of the Aplhabet bonds go up in the next few years, what would happen to the price? Explain
q1. Alphabet Pty recently issued 25 million bonds with a face value of $8,000 each. The coupon rate of the bonds is 7% p.a., paid semi-annually. The bonds have a maturity of 150years, and bonds of similar risk pay a yield to maturity of 5% p.a. semi-annually. For what price does each bond sell currently? Enter your answer to the nearest cent (two decimal places). q2.If the yield of the Aplhabet bonds go up in the next few years, what would happen to the price? Explain
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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q1. Alphabet Pty recently issued 25 million bonds with a face value of $8,000 each. The coupon rate of the bonds is 7% p.a., paid semi-annually. The bonds have a maturity of 150years, and bonds of similar risk pay a yield to maturity of 5% p.a. semi-annually. For what price does each bond sell currently? Enter your answer to the nearest cent (two decimal places).
q2.If the yield of the Aplhabet bonds go up in the next few years, what would happen to the price? Explain.
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