On january 1 2017 you purchased a 10-year bond issued by, Ask an Expert

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On January 1, 2017, you purchased a 10-year bond issued by Alpha Inc. at par. The bond features an 8% coupon (exist40 every six months) and a par value of exist1,000. Within minutes of purchasing the bond, Alpha announced financial problems, and the terms of the bond were renegotiated overnight. Going forward, Alpha will only pay a 6% coupon (exist30 every six months) and exist800 at maturity. The YTM rose to 24.43% on January 2, 2017.

What is the true discount rate (nominal annual rate with semi-annual compounding) investors are applying to the renegotiated cash flows?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92384392

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