YMMV Inc. issues a bond with a face value of $65,000,000 with a coupon rate of 2.500% maturing in 23 years. The current yield rate is r12) = 9.000%. TFC will secure the bond by making monthly deposits into a sinking fund paying 9.750% compounded weekly. YMMV defaults on the bond after 20 years (just after making their coupon payment, and sinking fund deposit). The bondholders receive the balance in the sinking fund. How much money do they lose? a. $18,432,534.71. b. $19,169,836.10. c. $18,616,860.06. d. $14,746,027.77. e. $18,063,884.02. Certaintye : OC=1 (Unsure: <67%) OC=2 (Mid: >67%) OC=3 (Quite sure: >80%)
YMMV Inc. issues a bond with a face value of $65,000,000 with a coupon rate of 2.500% maturing in 23 years. The current yield rate is r12) = 9.000%. TFC will secure the bond by making monthly deposits into a sinking fund paying 9.750% compounded weekly. YMMV defaults on the bond after 20 years (just after making their coupon payment, and sinking fund deposit). The bondholders receive the balance in the sinking fund. How much money do they lose? a. $18,432,534.71. b. $19,169,836.10. c. $18,616,860.06. d. $14,746,027.77. e. $18,063,884.02. Certaintye : OC=1 (Unsure: <67%) OC=2 (Mid: >67%) OC=3 (Quite sure: >80%)
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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Transcribed Image Text:YMMV Inc. issues a bond with a face value of $65,000,000 with a coupon rate of 2.500% maturing in 23 years.
The current yield rate is r(12) = 9.000%. TFC will secure the bond by making monthly deposits into a sinking
fund paying 9.750% compounded weekly. YMMV defaults on the bond after 20 years (just after making their
coupon payment, and sinking fund deposit). The bondholders receive the balance in the sinking fund. How
much money do they lose?
a. $18,432,534.71.
b. $19,169,836.10.
c. $18,616,860.06.
d. $14,746,027.77.
e. $18,063,884.02.
Certaintye : OC=1 (Unsure: <67%) OC=2 (Mid: >67%) OC=3 (Quite sure: >80%)
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