What would be the price if comparable debt yields 12

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A high-yield bond has the following terms: Principal amount $1,000 Annaul Interest Paid $100 Maturity 10 years

(a) What is the bond's price if comparable debt yields 12 percent?

(b) What would be the price if comparable debt yields 12 percent and the bond matures after five years.

(c) What are the current yields and yields to maturity in a and b?

(d) What would be the bond's price in a and b if interest rates declined to 9 percent?

(e) What are the curretn yield and yield to maturity in d?

(f) What two generalizations may be drawn from the above price changes?

Reference no: EM13619988

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