Dragon Corporation has three types of debt outstanding, even though it has plenty of cash. Coupons...
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Dragon Corporation has three types of debt outstanding, even though it has plenty of cash. Coupons are paid on March 1. Bond P is 10-year, 8% coupon, $1000 face value straight debt. Bond Q is 10-year, 8% coupon, $1000 face value debt, convertible into 20 shares on March 2, 2025. Bond R is 10-year, 8% coupon, $1000 face value debt, callable at 110 on March 2, 2025. Suppose, on March 2, 2025: Bond P has price 103; Dragon share price is 58. what is the quoted price of Bond R? Dragon Corporation has three types of debt outstanding, even though it has plenty of cash. Coupons are paid on March 1. Bond P is 10-year, 8% coupon, $1000 face value straight debt. Bond Q is 10-year, 8% coupon, $1000 face value debt, convertible into 20 shares on March 2, 2025. Bond R is 10-year, 8% coupon, $1000 face value debt, callable at 110 on March 2, 2025. Suppose, on March 2, 2025: Bond P has price 103; Dragon share price is 58. what is the quoted price of Bond R?
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Answer rating: 100% (QA)
SOLUTION To determine the quoted price of Bond R we need to calculate its yield to maturity taking into account the fact that it is callable at 110 on March 2 2025 The yield to maturity is the discoun... View the full answer
Related Book For
Concepts In Federal Taxation
ISBN: 9780324379556
19th Edition
Authors: Kevin E. Murphy, Mark Higgins, Tonya K. Flesher
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