Bond immediately after it makes its first coupon payment

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1. Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $ 1,000, and a coupon rate of 7.2% (annual payments). The yield to maturity on this bond when it was issued was 6.5 %. What was the price of this bond when it was issued?

2. Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $ 1,000, and a coupon rate of 7.6 % (annual payments). The yield to maturity on this bond when it was issued was 6.5 %. Assuming the yield to maturity remains constant, what is the price of the bond immediately after it makes its first coupon payment?

3. Your company currently has $ 1,000 par, 6.25 % coupon bonds with 10 years to maturity and a price of $ 1,065. If you want to issue new 10-year coupon bonds at par, what coupon rate do you need to set? Assume that for both? bonds, the next coupon payment is due in exactly six months.

Reference no: EM131987176

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