Find the total market value of the bond

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Question - Cryote issued bonds with a total face value of $100 million in July 20x9. The bonds had a coupon of 7%, meaning that each bond paid $70.00 in interest every year. The bonds were to mature after 5 years. The bonds are secured against the fixed assets of Cryote.

a) Find the total market value of the bond, assuming that the yield demanded is 10%.

b) What would be the expectations regarding the bond prices of another Cryote bond issue which is non-secured? Would it be higher or lower than your answer in (a)? Explain why.

Reference no: EM133008542

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