Recall that par rate is the coupon rate

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Reference no: EM131958179

1. Annasam Corporation recently issued 20-year bonds. The bonds have a coupon rate of 7 percent and pay interest semiannually. Also, the bonds are callable in 6 years at a call price equal to 115 percent of par value. The par value of the bonds is $1,000. If the yield to maturity is 8 percent, what is the yield to call? (Hint: 2 part problem using PV and rate)

7.75% 10.20% 13.45% 14.08%.

2. Recall that the Par Rate is the coupon rate such that a bond sells at par. A company wants to issue a 2 year bond with annual payment that sells at par. Assume R(0,1) = 4% and R(0,2)= 6%.The coupon rate should be set at

7.3%

5.94%

6.21%

Reference no: EM131958179

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