Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 85 basis points (0.85%). Your firm's five- year debt has a coupon rate of 6.1% with semi-annual coupons. You se that new five-year Treasury notes are being issued at par with a coupor rate of 1.9%. What should be the price of your outstanding five-year bonds per $100 face value.
Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 85 basis points (0.85%). Your firm's five- year debt has a coupon rate of 6.1% with semi-annual coupons. You se that new five-year Treasury notes are being issued at par with a coupor rate of 1.9%. What should be the price of your outstanding five-year bonds per $100 face value.
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:Your firm has a credit rating of A. You notice that the credit spread
for five-year maturity A debt is 85 basis points (0.85%). Your firm's five-
year debt has a coupon rate of 6.1% with semi-annual coupons. You see
that new five-year Treasury notes are being issued at par with a coupon
rate of 1.9%. What should be the price of your outstanding five-year
bonds per $100 face value.
The price of the bond is $
...
(Round to the nearest cent.)
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