Show and explain how you get the answers. a) ACMEs bond carries a 8 percent...
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a) ACMEs bond carries a 8 percent coupon, pays interest semiannually, and has 7 years to maturity. Its face value is $100. If markets require 10% YTM, what would be the market price of the bond?
b )ACMEs bond carries a 8 percent coupon, pays interest semiannually, and has 7 years to maturity. Its face value is $100. What is the bond's yield to maturity if the bond is selling for $92?
c) Acme inc. wants to issue 9% coupon rate debentures and subordinated debentures at the same time tomorrow. Both will have the same maturities. If the debentures are expected be sold at par, can the subordinated debenture be sold at the same price? Why or why not?
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