YMMV Inc. issues a 6 year bond with a 7.000% coupon and a $5,000,000.00 face value. The yield rate on the bond is 9.250% compounded monthly. They will set up a sinking fund with monthly deposits and an interest rate r(2) = 6.000%. a) How much are the monthly deposits into the sinking fund? b) YMMV defaults on the
YMMV Inc. issues a 6 year bond with a 7.000% coupon and a $5,000,000.00 face value. The yield rate on the bond is 9.250% compounded monthly. They will set up a sinking fund with monthly deposits and an interest rate r(2) = 6.000%. a) How much are the monthly deposits into the sinking fund? b) YMMV defaults on the
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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YMMV Inc. issues a 6 year bond with a 7.000% coupon and a $5,000,000.00 face value. The yield rate on the bond is 9.250% compounded monthly. They will set up a sinking fund with monthly deposits and an interest rate r(2) = 6.000%.
a) How much are the monthly deposits into the sinking fund?
b) YMMV defaults on the bond at the end of year 2 . What is the price of the bond at the time they default?
c) How much is in the sinking fund at the time of default? How much money do the bondholders end up losing?
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