a. Whale Watching Limited issued 14-year bonds one year ago at a coupon rate of 6.9...
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a. Whale Watching Limited issued 14-year bonds one year ago at a coupon rate of 6.9 percent. The bonds have a face value of $200 000 and make semi-annual payments. If the YTM on these bonds is 5.5 percent, what is the current bond price? (P = - C₁ (1+ytm) (1+ytm)" + Par +] : [PV = PM | 1 (0)| (PV of coupon payments) (5 marks) b. If you expect the future inflation rate is low in next year, what characteristics of the straight bond will have a better performance in terms of coupon rate, yield-to-maturity and time to maturity? a. Whale Watching Limited issued 14-year bonds one year ago at a coupon rate of 6.9 percent. The bonds have a face value of $200 000 and make semi-annual payments. If the YTM on these bonds is 5.5 percent, what is the current bond price? (P = - C₁ (1+ytm) (1+ytm)" + Par +] : [PV = PM | 1 (0)| (PV of coupon payments) (5 marks) b. If you expect the future inflation rate is low in next year, what characteristics of the straight bond will have a better performance in terms of coupon rate, yield-to-maturity and time to maturity?
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Answer rating: 100% (QA)
SOLUTION a To calculate the current bond price we can use the formula for the present value of a bonds cash flows Bond Price C 1 YTM22t Par 1 YTM22n W... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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