Fixed Income Corporation just issued 10-year $1000 bonds with a coupon rate of 5.5% per annum.
A. If you required a return of 6% per annum and the coupons are paid annually, what would you be willing to pay for one of these bonds?
B. If you required a return of 6% per annum and the coupons are paid semi-annually, what would you be willing to pay for one of these bonds?
C. Would you buy Hill Corporation bonds from (b) (Semi-annual coupon) if they were trading at $900? Why?
D. Briefly explain what is meant by investment risk?

    • Posted: 5 years ago
    Bond

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