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YMMV Inc. issues a bond with a face value of $60,000,000 with a coupon rate of 4.250% maturing in 8 years. The current yield rate is r26) = 5.250%. TFC will secure the bond by making quarterly deposits into a sinking fund paying 1.250% compounded quarterly. YMMV defaults on the bond after 7 years (just after making their coupon payment, and sinking fund deposit). The bondholders receive the balance in the sinking fund. How much money do they lose? O a. $6,423,839.58. O b. $7,217,797.29. O c. $7,578,687.15. O d. $7,506,509.18. O e. $6,279,483.64.

YMMV Inc. issues a bond with a face value of $60,000,000 with a coupon rate of 4.250% maturing in 8 years. The current yield rate is r26) = 5.250%. TFC will secure the bond by making quarterly deposits into a sinking fund paying 1.250% compounded quarterly. YMMV defaults on the bond after 7 years (just after making their coupon payment, and sinking fund deposit). The bondholders receive the balance in the sinking fund. How much money do they lose? O a. $6,423,839.58. O b. $7,217,797.29. O c. $7,578,687.15. O d. $7,506,509.18. O e. $6,279,483.64.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 17P
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YMMV Inc. issues a bond with a face value of $60,000,000 with a coupon rate of 4.250% maturing in 8 years. The current yield rate is r26) = 5.250%. TFC will secure the bond by making quarterly deposits into a sinking fund paying 1.250% compounded quarterly. YMMV defaults on the bond after 7 years (just after making their coupon payment, and sinking fund deposit). The bondholders receive the balance in the sinking fund. How much money do they lose? O a. $6,423,839.58. O b. $7,217,797.29. O c. $7,578,687.15. O d. $7,506,509.18. O e. $6,279,483.64.
Transcribed Image Text:YMMV Inc. issues a bond with a face value of $60,000,000 with a coupon rate of 4.250% maturing in 8 years. The current yield rate is r26) = 5.250%. TFC will secure the bond by making quarterly deposits into a sinking fund paying 1.250% compounded quarterly. YMMV defaults on the bond after 7 years (just after making their coupon payment, and sinking fund deposit). The bondholders receive the balance in the sinking fund. How much money do they lose? O a. $6,423,839.58. O b. $7,217,797.29. O c. $7,578,687.15. O d. $7,506,509.18. O e. $6,279,483.64.
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