Orange SAE issued a bond with a par value of $1000 in January 2020, redeemable in...
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Orange SAE issued a bond with a par value of $1000 in January 2020, redeemable in January 2025 at par. The coupon rate is 10% payable annually in January-first payment in 2021. (1) Calculate the price investors will be willing to pay for this bond at the time of issue, considering that the market rate of interest for securities in similar risk class is 8%. Based on your price calculations, is the bond traded at a premium, a discount or at par? And why? Orange SAE issued a bond with a par value of $1000 in January 2020, redeemable in January 2025 at par. The coupon rate is 10% payable annually in January-first payment in 2021. (1) Calculate the price investors will be willing to pay for this bond at the time of issue, considering that the market rate of interest for securities in similar risk class is 8%. Based on your price calculations, is the bond traded at a premium, a discount or at par? And why?
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Related Book For
Investment Analysis and Portfolio Management
ISBN: 978-0538482387
10th Edition
Authors: Frank K. Reilly, Keith C. Brown
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