Midland utilities has outstanding a bond issue that will, Ask an Expert

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Midland Utilities has outstanding a bond issue that will mature to its $1,000 par value in 11 years. The bond has a coupon interest rate of 13% and pays interest annually

a. Find the value of the bond if the required return is? (1)13?%, (2)17?%, and? (3) 10%.

b. Use your finding in part a to discuss the relationship between the coupon interest rate on a bond and the required return and the market value of the bond relative to its par value.

c. What two possible reasons could cause the required return to differ from the coupon interest? rate?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92077998

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