Xtz corporation issues a 30-year 8 annual coupon rate bond, Ask an Expert

Finance

XTZ corporation issues a 30-year, 8% annual coupon rate bond 10 years ago. The current yield to maturity of bonds with similar risk is 6% Assume that the bond was issued at par value.

a) What is the current price of the bond?

b) Is the bond trading at par, premium or a discount? Why? Provide economic reasoning

Assume that 1 year passes and yield curve remains constant, calculate the new price of the bond.

c) What is the new price of the bond?

d) Verify that YTM is equal to the capital appreciation and coupon yield of that year.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92077619

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