FIND A SOLUTION AT Academic Writers Bay
a. Middleton expects to buy a 9.5% coupon, 15 years bond today, when it is first issued by AlexPLC. If interest rates suddenly rise to 12.5%, what happens to the value of Middleton’s bond?Why? (Word limit 20 – 30 words) (3 Marks)b. A corporate bond has a face value of $1 000, a coupon rate of interest of 10.5% per annum,payable semi-annually, and 20 years remaining to maturity. The market interest rate for bondsof similar risk and maturity is currently 8.5% per annum.Required:i. What is the coupon payment of the bond? (1 mark)ii. What is the present value of the bond? (3 marks)iii. If the coupon payment is payable annual (based on the same information), what isthe value of the bond?
- Assignment status: Already Solved By Our Experts
- (USA, AUS, UK & CA PhD. Writers)
- CLICK HERE TO GET A PROFESSIONAL WRITER TO WORK ON THIS PAPER AND OTHER SIMILAR PAPERS, GET A NON PLAGIARIZED PAPER FROM OUR EXPERTS
QUALITY: 100% ORIGINAL PAPER – NO PLAGIARISM – CUSTOM PAPER