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Assets, Inc., plans to issue $6 million of bonds with a coupon rate of 7 percent,...

Assets, Inc., plans to issue $6 million of bonds with a coupon rate of 7 percent, a par value of $1,000, semiannual coupons, and 10 years to maturity. The current market interest rate on these bonds is 8 percent. In one year, the interest rate on the bonds will be either 8 percent or 4 percent with equal probability. Assume investors are risk-neutral.

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

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jeff jeffy answered 5 hours ago
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