Problem 1: You are considering investing in a 10-year bond issued by NewEnergy Inc. This bond...
| Problem 1: | You are considering investing in a 10-year bond issued by NewEnergy Inc. This bond has $1000 face value, 4% coupon rate. | |||||||||
| The bond pays coupons semi-annually and is currently selling at $920. The bond can be called at a $1,040 in 3 years. | ||||||||||
| 1.a. (10 points): | If your required rate of return if 6% for bonds in this risk class, what is the maximum price you should pay for this bond? (Use PV function) | |||||||||||
| Coupon rate= | ||||||||||||
| Required return= | N= | |||||||||||
| Years to maturity= | I/Y= | |||||||||||
| Payment frequency= | FV= | |||||||||||
| Face Value= | PMT= | |||||||||||
| Call price= | PMT Type= | |||||||||||
| Current market price= | PV= | |||||||||||
| the maximum price you should pay for this bond: | ||||||||||||
| 1.b. (10 points) | What is the current yield of this bond? | ||
| Current yield = | |||
Please show All of your work as is in the cells please.
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Problem 1:
You are considering investing in a 10-year bond issued by NewEnergy
Inc. This bond...
Problem 1: You are considering investing in a 10-year bond issued by NewEnergy Inc. This bond...
Problem 1: You are considering investing in a 10-year bond issued by NewEnergy Inc. This bond has $1000 face value, 4% coupon rate. The bond pays coupons semi-annually and is currently selling at $920. The bond can be called at a $1,040 in 3 years. 1.a. (10 points): If your required rate of return if 6% for bonds in this risk class, what is the maximum price you should pay for this bond? (Use PV function) Coupon rate= Required return=...
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