Question: Sun Devil Savings has just purchased bonds for $ 3 8 million that have a par value of $ 4 0 million, five years remaining
Sun Devil Savings has just purchased bonds for $ million that have a par value of $million, five years remaining to maturity, and a coupon rate of percent. It expects therequired rate of return on these bonds to be percent two years from nowRequired:i ii At what price could Sun Devil Savings sell these bonds for two years from now?What is the expected annualized yield on the bonds over the next two years, assumingthey are to be sold in two years?iii. If the anticipated required rate of return of percent in two years is overestimated,how would the actual selling price differ from the forecasted price? How would theactual annualized yield over the next two years differ from the forecasted yield?
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