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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Question
![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 10%. 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 9% ?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4f963745-68c9-4a3c-b88b-a1f7956134f9%2F84cb490a-2051-4975-9025-a3b85ab3a48c%2F19mwdig_processed.png&w=3840&q=75)
Transcribed Image Text: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 10%. 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 9% ?
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