Bond Price and Yield to Maturity of 7%
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Company A issued bonds at face value at a yield to maturity of 7%. With 8 years left to maturity, the company has troubles and yield to maturity on the bonds is up to 15%. What happened to the bond price?
If the company can meet its coupon payments but expected to go bankrupt when the bond matures, and investors expect to receive only 80% of face value at maturity, what is the yield to maturity that investors expect to receive if they purchase the bond today?
Please show formula and calculation in Excel
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The solution explains how to calculate the bond price and yield.
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Company A issued bonds at face value at a yield to maturity of 7%. With 8 years left to maturity, the company has troubles and yield to maturity on the bonds is up to 15%. What happened to the bond price?
When the bond is issued at face value, then the yield and the coupon rate are the same. The bond has a coupon rate of 7%. The price ...
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