Problemmega industries corp has eighteen years of a bond, Ask an Expert

Accounting

Problem:

Mega Industries Corp has eighteen years of a bond outstanding to maturity, an 8.25% nominal coupon, with semiannual payments. The bond has a 6.5% nominal yield to maturity and can be called at a price of $1,120.

Requirement:

Question 1: What is the bond's nominal yield to maturity when called?

Question 2: What is the bond's effective yield? If the inflation rate is 2.95% what is the real rate of return?

Note: Provide support for your underlying principle.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91170082

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