With celebrity bonds, celebrities raise money by issuing bonds to investors. The royalties from sales of the music are used to pay interest and principal on the bonds. In April of 2009, EMI announced that it intended to securitize its back catalogue with the help of the Bank of Scotland. The bond was issued with a coupon rate of 6.9% and will mature on this day 36 years from now. The yield on the bond issue is currently 6.1%. At what price should this bond trade today, assuming a face value of $1,000 and annual coupons?
Face Value = $1000
Annual Coupon payment = $1000*6.9%
= $69
No of years to maturity from today(n) = 36 years
Yield to maturity (YTM) = 6.1%
Calculating the Price of Bond:-
Price = $996.9465 + $118.644
Price = $1115.59
So, Price the bond should trade at $1115.59
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With celebrity bonds, celebrities raise money by issuing bonds to investors. The royalties from sales of...
With celebrity bonds, celebrities raise money by issuing bonds to investors. The royalties from sales of the music are used to pay interest and principal on the bonds. In April of 2009, EMI announced that it intended to securitize its back catalogue with the help of the Bank of Scotland. The bond was issued with a coupon rate of 6.95% and will mature on this day 26 years from now. The yield on the bond issue is currently 6.45%. At...
With celebrity bonds, celebrities raise money by issuing bonds to investors. The royalties from sales of the music are used to pay interest and principal on the bonds. In April of 2009, EMI announced that it intended to securitize its back catalogue with the help of the Bank of Scotland. The bond was issued with a coupon rate of 6.8%and will mature on this day 20 years from now. The yield on the bond issue is currently 6.4%. At what...
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