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Corporate finance-debt instruments

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Reference no: EM133074255

Subject: Corporate Finance - Debt Instruments

A Bullet bond is being valued with a face value of $200,000,000 with a coupon rate of 10% annual SIMPLE, 3-year term with SEMI-ANNUAL PAYMENTS. Answer:

(a) How much would you pay for the bond if a 7% annual nominal COMPOUND annual return is demanded?

(b) What is the return on the transaction if the bond is purchased at $212,000,000?

(c) Suppose you buy the bond, what is the return on the trade if you sell it at a price of $205,000,000 after receiving the third COUPON?

Reference no: EM133074255

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