Horizon Capital issued coupon bearding bonds on 12 August 2021, each with a $1,000 par...
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Horizon Capital issued coupon bearding bonds on 12 August 2021, each with a $1,000 par value and a coupon rate of 1.7% per annum. The corporate bonds were sold for $968 each and are scheduled to mature on 12 August 2037. These bonds are callable at $1,080 as of 12 August 2028.
Required: 1 Determine the current yield to maturity offered to investors if they purchased Horizon Capitals coupon bearing bonds today as of 12 August 2021. 2 Three years after issuance, the corporate bonds of Horizon Capital are trading at a value of $939.42. If you currently require a rate of return of 3% per annum on investments of this perceived risk level, should you buy these bonds as of 12 August 2024? In your answer, please ensure you explain in one sentence why you believe these bonds will be called or not. 3 Describe in detail three of the main risks investors are exposed to when purchasing corporate bonds.
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