Background Part 1: The Company is issuing 10,000 bonds, each with a face value of...
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Background Part 1: The Company is issuing 10,000 bonds, each with a face value of $950, a stated rate of 7.5%, and an 18-year term. When the bonds are issued, the market rate is 6.9%. REQUIRED: A) What is the maximum price an investor will pay for a single bond? B) What is the total capital collected by the Company if all of the investors pay the maximum price? Background Part 2: 8 years later, an investor sells his bond for $925. REQUIRED: C) What is the actual yield to maturity (YTM)? D) If the YTM were 7.5%, what would be the current price
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