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11- ABC's has an outstanding bond with a coupon rate of 8 percent that matures in...

11- ABC's has an outstanding bond with a coupon rate of 8 percent that matures in 12 years. The bond pays interest annually. If the face value of the bond is $1,000 face value and the yield to maturity is 6 percent, find the following "Show your formula and calculations":

  1. Is this bond issued at discount, premium, or at par? Why?
  2. What is the value of the bond at the date of issuance? (you may use your financial calculator)
  3. What is the capital gain yield in the first year? Show your calculation
  4. What is the current yield in the first year? Show your calculation

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Expert Solution

jeff jeffy answered 1 year ago
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