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HMK Enterprises would like to raise $10 million to invest in capital expenditures. The company plans...

HMK Enterprises would like to raise $10 million to invest in capital expenditures. The company plans to issue five-year bonds with a face value of $1000 and a coupon rate of 6.5% (annual payments). The following table summarizes the yield to maturity for five-year (annual-pay) coupon corporate bonds of various ratings:

Rating

AAA

AA

A

BBB

BB

YTM

6.20%

6.30%

6.50%

6.90%

7.50%

Rating

AAA

AA

A

BBB

BB

Yield to maturity

7.50%

Price of bonds with various ratings

a.

b.

c.

d.

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jeff jeffy answered 3 months ago
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