Xyz corporation issued a 30 year 7 annual coupon bond five, Ask an Expert

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XYZ Corporation issued a 30 year, 7% annual coupon bond five years ago. The current yield to maturity of bonds with similar risk is 6% annually. Assume that the bond was issued at par value ($1,000).

a) What is the current price of the bond? Is it trading at a premium, discount or at par?

b) Suppose that interest rates rose to 8% annually, what is the new price of the bond? Is it trading at a premium, discount or at par?

c) Suppose that interest rates rose to 7% annually, what is the new price of the bond? Is it trading at a premium, discount or at par?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92054722

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