A firm issues two-year bonds with a coupon rate of 6.4%, paid semiannually. The credit spread for this firm's two-year debt is 0.8%. New two-year Treasury notes are being issued at par with a coupon rate of 3.5%. What should the price of the firm's outstanding two-year bonds be per $100 of face value? OA. $145.58 B. $103.98 OC. $83.19 D. $124.78

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 16P
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A firm issues two-year bonds with a coupon rate of 6.4%, paid semiannually. The credit spread for this firm's two-year
debt is 0.8%. New two-year Treasury notes are being issued at par with a coupon rate of 3.5%. What should the price
of the firm's outstanding two-year bonds be per $100 of face value?
OA. $145.58
B. $103.98
O C. $83.19
OD. $124.78
Transcribed Image Text:A firm issues two-year bonds with a coupon rate of 6.4%, paid semiannually. The credit spread for this firm's two-year debt is 0.8%. New two-year Treasury notes are being issued at par with a coupon rate of 3.5%. What should the price of the firm's outstanding two-year bonds be per $100 of face value? OA. $145.58 B. $103.98 O C. $83.19 OD. $124.78
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