Chapter 6 HW.docx - Chapter 6 Homework 8 A 6-year Circular...

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Chapter 6 Homework 8. A 6-year Circular File bond with face value $1,000 pays interest once a year of $80 and sells for $950. (LO6-2)
a. What is its coupon rate?
b. What is its yield to maturity?
c. If Circular wants to issue a new 6-year bond at face value, what coupon rate must the bond offer?
35. A bond’s credit rating provides a guide to its risk. Suppose that long term bonds rated Aa currently offer yield to maturity of 7.5%. A-rated bonds sell at yields of 7.8%. Suppose that a

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