Suppose a bond matures in n15 years pays c85 coupon, Ask an Expert

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Suppose a bond matures in N=15 years, pays C=8.5% coupon semi-annually if held to maturity and has a Face Value of $7500. The market rate currently available on a comparable bond is r=6%.

1) what is the value of the bond if sold today?

2) would you sell at a discount or premium? Why?

3) what is the value of the bond if the market rate currently available on comparatable bonds increased to r=9%

4) would you sell at a discount or premium? Please explain why?

5) what is the value of a $7500 bond if sold today instead the bond pays C=6.5% quarterly if held to maturity and at a market rate of 5%?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92746945

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