This morning a corporate bond of Carnival Corp Inc was being traded at par of $1,000. By midday, the company announces that it will not be able to pay future annual coupons but only the principal when the bond expires. If the yield to maturity is 10% p.a. compounded annually, the coupon rate is 10% p.a., and the bond is due to expire in 4 years' time, at what price would this bond of Carnival Corp Inc trade for after the announcement? a. $836.23 b. None of the options is correct c. $819.65 d. $944.10 e. $776.84
This morning a corporate bond of Carnival Corp Inc was being traded at par of $1,000. By midday, the company announces that it will not be able to pay future annual coupons but only the principal when the bond expires. If the yield to maturity is 10% p.a. compounded annually, the coupon rate is 10% p.a., and the bond is due to expire in 4 years' time, at what price would this bond of Carnival Corp Inc trade for after the announcement? a. $836.23 b. None of the options is correct c. $819.65 d. $944.10 e. $776.84
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 15P
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