Reference no: EM132803323
Consider a bond with a settlement date of February 22,2015, and a maturity date of March 15, 2023. The coupon rate is 5.5%. If the yield to maturity of the bond is 5.34% (bond equivalent yield, semiannual compounding). Assume actual/actual for the basis.
What is the list price of the bond on the settlement date?
b. What is the accrued interest on the bond?
c. What is the invoice price of the bond?
d. If the bond is selling 102, what is the bond's yield to maturity?
2. A 10 year $1000 bond of a firm in severe financial distress has a coupon rate of 14% and sells for $900. The firm is currently renegotiating the debt, and it appears that the lenders will allow the firm to reduce coupon payments on the bond to one-half the originally contracted amount. The firm can handle these lowers payments. The bond makes its coupon payments annually.
a. What is the stated yield?
b. What is the expected yield?
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