a) One year ago, Alpha Supply issued 15-year bonds at par. The bonds have a coupon...

 

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a) One year ago, Alpha Supply issued 15-year bonds at par. The bonds have a coupon rate of 6.5 percent and pay interest annually. Today, the market rate of interest on these bonds is 7.2 percent. How does the price of these bonds today compare to the issue price? (10 marks) b) A bond has a yield to maturity of 9.38 percent, a 7.5 percent annual coupon, a $1,000 face value, and a maturity date 21 years from today. What is the current yield? c) Describe factors affecting bond's grade. (10 marks) (10 marks) a) One year ago, Alpha Supply issued 15-year bonds at par. The bonds have a coupon rate of 6.5 percent and pay interest annually. Today, the market rate of interest on these bonds is 7.2 percent. How does the price of these bonds today compare to the issue price? (10 marks) b) A bond has a yield to maturity of 9.38 percent, a 7.5 percent annual coupon, a $1,000 face value, and a maturity date 21 years from today. What is the current yield? c) Describe factors affecting bond's grade. (10 marks) (10 marks)

Answer rating: 100% (QA)

Bond Pricing and Factors Affecting Bond Grades a Price Comparison of Alpha Supply Bonds When a bond is issued at par it means the issue price equals the face value In this case the bonds were issued a... View the full answer