Draw the cash flow time line

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The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 10 years. The bond certificate indicates that the stated coupon rate for this bond is 7% and that the coupon payments are to be made semiannually? Use the information above for answering the questions below:

a) How much will each semiannual coupon payment be?

b) Draw the cash flow time line showing the cash flows for Sisyphean's bond.

c) Assuming the appropriate YTM on the Sisyphean bond is 7.5%, what will be the price that this bond should trade theoretically for (hint present value determines the theoretical value)?

d) If the YTM on the Sisyphean's bond is 6%, will this bond trade at a premium or discount from par value of the bond?

Reference no: EM132726009

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