Business, 27.11.2019 02:31 ayoismeisalex

Gmm co. plans to issue annual coupon bonds with 7.5% coupon rate to the public, maturing in 10 years. the face value of the bond is $1,000. you, as the cfo, want to decide how to set the price for the bond.
you notice that 2 years ago, your company issued a 15-year annual coupon bond with 8% coupon rate.
the current market price for the outstanding old bond is $950.

what is the fair price for the new 10-year annual coupon bond?

a. 1000

b. 924.70

c. 1024.70

d. 934.70

e. 1034.70

Answers: 2

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Gmm co. plans to issue annual coupon bonds with 7.5% coupon rate to the public, maturing in 10 years...

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