Suppose company x has issued a bond that pays 11% interest ($55 semiannual coupons), and the current
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Question:
Suppose company x has issued a bond that pays 11% interest ($55 semiannual coupons), and the current market yield is 9%.
(a)If the bond matures in 20 years, compute its current price.
(b)What if the bond matures in 1 year?
(c)What do you notice when comparing the 2 prices and their components?
Related Book For
Introduction To Corporate Finance
ISBN: 9781118300763
3rd Edition
Authors: Laurence Booth, Sean Cleary
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