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Market Value of Bonds for Hartnett Company

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An insurance company purchased bonds issued by Hartnett Company two years ago. Today, Cookeres Company has begun to issue junk bonds and is using the funds to repurchase most of its existing stock. Why might the market value of those bonds held by the insurance company be affected by this action?

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The solution examines market value of bond for Hartnett Company.

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As we know that junk bond carry high return as well as high risk. Company issues junk bond when the bondholder ...

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