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The telecom EarthCOM issued bonds to finance a new wireless product. The bonds were issued for...

The telecom EarthCOM issued bonds to finance a new wireless product. The bonds were issued for 30 years, with a face value of $1000, and semiannual coupons. The coupon rate on these bonds is 8% APR. Over the last four years, the company has experienced financial difficulty as the market has grown more competitive.The risk associated with EarthCOM bonds has increased dramatically, as investors now want a 15% return to hold the bonds. At what price should the bonds trade today?Today, EarthCOM admitted to fraud in reporting revenues over the last three years. The price of EarthCOM immediately tumbled to $500. What is the new yield to maturity on EarthCOM bonds?

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jeff jeffy answered 2 years ago
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