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    Bonds - Bond Par Value

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    A firm issues a bond at par value. Shortly thereafter, interest rates fall. If you calculated the coupon rate, coupon yield, and yield to maturity for this bond after the decline in interest rates, which of the three value would be highest and which would be lowest? Explain.

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    bonds
    A firm issues a bond at par value. Shortly thereafter, interest rates fall. If you calculated the coupon rate, coupon yield, and yield to maturity for this bond after the decline in interest rates, which of the three value would be highest and which would be lowest? Explain.
    First, we will make the assumption of a bond, which has 10 years until maturity, a coupon rate of 8 percent, and sells for $1,100 since the decline in interest rates will make the bond price to increase.

    a. What is the current yield on the bond?

    Current yield = Annual Coupon ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer which of the three value would be highest and which would be lowest.

    $2.19

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