Lucky Rainbow's Fruity Candy, the number one producer of wine gums and jelly beans in over...
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Lucky Rainbow's Fruity Candy, the number one producer of wine gums and jelly beans in over 50 countries, is planning a bond issue. The bonds have a face value of $1,000 and pay a coupon rate of 5%. The bonds have a maturity of five years. a. Each bond sells at 900 dollars. What is the yield to maturity? b. If Lucky Rainbow's wants the bond to sell at par, with the same yield to maturity, what's the coupon they need to pay? c. On another issue, you know the bond's yield to maturity is 10%, the face value is $10,000, the maturity is six years and the coupon rate is 8%. What is the price of this bond? Lucky Rainbow's Fruity Candy, the number one producer of wine gums and jelly beans in over 50 countries, is planning a bond issue. The bonds have a face value of $1,000 and pay a coupon rate of 5%. The bonds have a maturity of five years. a. Each bond sells at 900 dollars. What is the yield to maturity? b. If Lucky Rainbow's wants the bond to sell at par, with the same yield to maturity, what's the coupon they need to pay? c. On another issue, you know the bond's yield to maturity is 10%, the face value is $10,000, the maturity is six years and the coupon rate is 8%. What is the price of this bond?
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Answer rating: 100% (QA)
SOLUTION a The yield to maturity YTM is the rate of return that an investor would earn if they buy a bond at its current market price and hold it unti... View the full answer
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1259024962
6th Canadian edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim
Posted Date:
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