Value of the bond today and the yield to maturity

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The Big Ben Company has issued bonds which now have 15 years to maturity. The bonds have a par value (i.e. face value) of $1,000, coupon rate of 9% and the coupon payment is made annually.

Calculate the value of the bond today under the following scenarios:

The Yield to Maturity is 9%

The Yield to Maturity is 12%

The Yield to Maturity is 5%

What is the relationship between the value of the bond today and the Yield to Maturity?

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The paper has been solved in excel file. In this paper we have dealt with how to do valuation of debentures and equity shares. Valuation of equity sharing under constant dividend model, unfixed model has been done. Debt valuation on present value model has been done.

Reference no: EM131186397

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