Singapore Airlines has 6% $100,000 debentures outstanding in the corporate bond market, with exactly 5 years left until maturity. The bonds pay coupons quarterly.

(a) Explain the matching principle as it applies to finance. Given your explanation, in what situations might Singapore Airlines issue bonds like those outlined in the question? Provide an example to support your answer. (3 marks)

(b) Calculate the price of the corporate bond if the current market yields for equivalent bonds are 8% per annum, compounding quarterly. (4 marks)

(c) Explain why the price in part (b) greater/less than the face value of the bond 

Answer rating: 100% (QA)

Step 11 a The Matching Principle is a concept in finance which states that a company must match its ... View the full answer