What is the price of the bond immediately

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Question - Suppose that Alphabet Inc just issued a bond with 15 years until maturity, a face value of $100, and a coupon rate of 6%. The bond pays semi-annual coupons. The yield to maturity on this bond when it was issued was 10%.

a) What was the price of this bond when it was issued?

b) Is this bond sold at a discount, at par, or at a premium (relative to the face value)?

c) The yield to maturity decreased to 8% immediately after it made its eight coupon payments. What is the price of the bond immediately after it makes its eight coupon payments?

d) Suppose that the price of this bond after it makes its ninth coupon payment is $80. Compute the holding period return between coupon 8 and coupon 9?

Reference no: EM132920029

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