Question

Zero-coupon bond. Wesley Company will issue a zero-coupon bond LOADING... this coming month. The projected bond yield LOADING... is 6%. If the par value LOADING... is $5,000, what is the bond's price using a semiannual convention if

a. the maturity LOADING... is 10 years?

b. the maturity is 40 years?

c. the maturity is 60 years?

d. the maturity is 100 years?

Part B

Callable bond. Corso Books has just sold a callable bond. It is a thirty-year monthly bond with an annual coupon rate of 9% and $1,000 par value. The issuer, however, can call the bond starting at the end of 6 years. If the yield to call on this bond is 10% and the call requires Corso Books to pay one year of additional interest at the call (12 coupon payments), what is the bond price if priced with the assumption that the call will be on the first available call date?

What is the bond price if priced with the assumption that the call will be on the first available call date?

$

(Round to the nearest cent.)

Answer #1

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