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(Solved): Assets, Incorporated, plans to issue $5 million of bonds with a coupon rate of 6.8 percent, a par va ...



Assets, Incorporated, plans to issue $5 million of bonds with a coupon rate of 6.8 percent, a par value of $1,000, semiannual coupons, and 20 years to maturity. The current market interest rate on these bonds is 6.3 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.

a.If the bonds are noncallable, what is the price of the bonds today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)



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Solution : Assets Inc Par value of bonds $1,000.00 Coup
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