5 million bond issue coupon8 30y to maturity ytm 7 in one, Ask an Expert

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$5 million bond issue. Coupon=8%, 30y to maturity, YTM = 7%. In one year, you expect this rate to go to 10% (p=50%) or to 6% (p=50%).

(a) If the bond is noncallable, what’s the price today incorporating your guess about future interest rates?

(b) If the bond is callable, is the price today more / less than the price you calculated in (a)?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92744007

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