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DAH Inc has issued 12% bond that is to mature in nine years
DAH Inc has issued 12% bond that is to mature in nine years. The bond had a $1,000 per value, and it is due to be paid minuty. If you required to is 10%, what price would you be willing to pay for the bond? b) Calculate the value of a bond that is expected to mature in 13 years with a $1.000 face value. The interest coupe de and the red of 10 is paid annually Detail the four relationships of a Corporate Bond
Expert Solution
.
1.=1000*12%/10%*(1-1/(1+10%/2)^(2*9))+1000/(1+10%/2)^(2*9)=1116.8958690265
2.
=1000*8%/10%*(1-1/(1+10%)^(13))+1000/(1+10%)^(13)=857.932875947338
3.
If coupon rate is more than required return, price will be more than par
If coupon rate is less than required return, price will be less than par
If coupon rate is equal to required return, price will be equal to par
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