A bond has the following features: Coupons rate of 5%, a principal of $1,000, and...
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Finance
A bond has the following features: Coupons rate of 5%, a principal of $1,000, and term to maturity of 10 years. a) What will the holder of the bond receive when the bond matures? b) If the current rate of interest on comparable debt is 8%, what should be the price of this bond? Would you expect the firm to call this bond? Why? c) If the bond has a sinking fund that requires the firm to set aside annually with a trustee sufficient funds to retire the entire issue at maturity, how much must the firm remit each year for 10 years if the funds earn 8% annually and there is $100 million outstanding?
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