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Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 90 basis points (0.90%). Your firm's five-year debt has an annual coupon rate of 5.6%. You see that new five-year Treasury notes are being issued at par with an annual coupon rate of 1.9%. What should be the price of your outstanding five-year bonds? Assume $1,000 face value. Assuming a $1,000 face value, the price of the bond is $ (Round to the nearest cent.)

Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 90 basis points (0.90%). Your firm's five-year debt has an annual coupon rate of 5.6%. You see that new five-year Treasury notes are being issued at par with an annual coupon rate of 1.9%. What should be the price of your outstanding five-year bonds? Assume $1,000 face value. Assuming a $1,000 face value, the price of the bond is $ (Round to the nearest cent.)

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 8P
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Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 90 basis points (0.90%). Your firm's five-year debt has an annual coupon rate of 5.6%. You see that new five-year Treasury notes are being issued at par with an annual coupon rate of 1.9%. What should be the price of your outstanding five-year bonds? Assume $1,000 face value. Assuming a $1,000 face value, the price of the bond is $ (Round to the nearest cent.)
Transcribed Image Text:Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 90 basis points (0.90%). Your firm's five-year debt has an annual coupon rate of 5.6%. You see that new five-year Treasury notes are being issued at par with an annual coupon rate of 1.9%. What should be the price of your outstanding five-year bonds? Assume $1,000 face value. Assuming a $1,000 face value, the price of the bond is $ (Round to the nearest cent.)
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