In: Finance
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: |
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Rating |
AAA |
AA |
A |
BBB |
BB |
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YTM |
6.20% |
6.30% |
6.50% |
6.90% |
7.50% |
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Rating |
AAA |
AA |
A |
BBB |
BB |
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Yield to maturity |
7.50% |
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Price of bonds with various ratings |
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a. |
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b. |
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c. |
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d. |
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