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What is the bond current yield as of right now

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Reference no: EM132993205

You are given the following information concerning a noncallable, sinking fund debenture:

Principal: $1,000
Coupon rate of interest: 7 percent
Term to maturity: 18 years
Sinking fund: 5 percent of outstanding bonds retired annually; the balance at maturity

Problem 1: If you buy the bond today at its face amount and interest rates rise to 13 percent after two years have passed, what is your capital gain or loss?

Problem 2: What is the bond's current yield as of right now?

Problem 3: Given your price in a, what is the yield at maturity?

Problem 4: What proportion of the total debt issue is retired by the sinking fund?

Problem 5: If the final payment to retire this bond is $1,100,000, how much must the firm invest annually to accumulate this sum if the firm is able to earn 7 percent on the invested funds?

Reference no: EM132993205

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