Question: [8 points] A 12-year, $1,000 par value bond has 8 years left to maturity and its coupon rate is 8%, with interest paid semi-annually. The
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[8 points] A 12-year, $1,000 par value bond has 8 years left to maturity and its coupon rate is 8%, with interest paid semi-annually. The bond is callable in three years at a call price (par value plus call premium) of $1,080. Consider each of the following situations separately. a. If the required return on this bond (the current market rate for similar bonds) is 6%, will this 4. bond sell for a premium or a discount (no calculations are needed)? What is the bond's current price if the market rate is 4.5%? If the bond is currently quoted at (selling for) $939.50 in the market, what is the Yield to Maturity? b. c. d. If the bond is currently quoted at (selling for) $939.50 in the market, what is the Yield to Call
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