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A company in a line of business similar to ABSA recently issued at par noncallable bonds with a coupon rate of 5.8% and a maturity of 20 years. The bonds were rated Aaa by Moody’s and AAA by Standard & Poor’s. What rate of return (yield to maturity) did investors require on these bonds if the bonds sold at par value?

A company in a line of business similar to ABSA recently issued at par noncallable bonds with a coupon rate of 5.8% and a maturity of 20 years. The bonds were rated Aaa by Moody’s and AAA by Standard & Poor’s. What rate of return (yield to maturity) did investors require on these bonds if the bonds sold at par value?

Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter11: Notes, Bonds, And Leases
Section: Chapter Questions
Problem 5Q
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For all questions, assume par value is R 1,000 and semiannual bond interest
payments.
 
a) A company in a line of business similar to ABSA recently issued at par
noncallable bonds with a coupon rate of 5.8% and a maturity of 20 years. The
bonds were rated Aaa by Moody’s and AAA by Standard & Poor’s. What rate of
return (yield to maturity) did investors require on these bonds if the bonds sold
at par value?
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