Vick incorporated sold bonds on January 1, 2005. The bonds were 15-year bonds with a 4 %
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Question:
Vick incorporated sold bonds on January 1, 2005. The bonds were 15-year bonds with a 4 % coupon. The market rate of interest was 5 percent.
The terminal value of the bond is 1000.
1. What was the price of the bonds?
2. What was the interest expense for the first two years?
3. On January 1, 2007 (after two years) the market rate of interest was now 3 percent. What would be the price of the bonds now?
4. If Vick were to buy back the bonds at this time, what would be the gain or loss?
Related Book For
Fundamentals of Investing
ISBN: 978-0133075359
12th edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
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