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Category > Business & Finance Posted 07 Jun 2017 My Price 3.00

KIC, Inc., plans to issue $5 million of bonds with a coupon rate of 8 percent and 30 years to maturity

KIC, Inc., plans to issue $5 million of bonds with a coupon rate of 8 percent and 30 years to maturity. The current market interest rates on these bonds are 7 percent. In one year, the interest rate on the bonds will be either 10 percent or 6 percent with equal probability. Assume investors are risk-neutral.

a.

If the bonds are noncallable, what is the price of the bonds today
 
 

 

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Alpha Geek
(8)
Status NEW Posted 07 Jun 2017 09:06 AM My Price 3.00

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file 1496828275-Answer.docx preview (170 words )
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