What is the new price immediately after the company makes

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Consider a company that just issued $10 million in 10-year, 5% coupon bonds where the coupons are paid semi-annually. Assume that the bond was issued at par.

Problem (a) What is the initial market price of the bond?

Problem (b) If one year later, the yield to maturity on the bond increases to 6%, what is the new price immediately before the company makes the second coupon payment?

Problem (c) If after two years (from the initial borrowing), the yield to maturity on the bond has now decreased to 4%, what is the new price immediately after the company makes the fourth coupon payment?

Reference no: EM132710138

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