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Absolom Motors 14% coupon rate, semiannual payment, $1000

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Absolom Motors' 14% coupon rate, semiannual payment, $1000 par value bonds that mature in 30 years are callable 5 years from now at a price of $1,050. The bond sells at a price of $1353.54 and the yield to curve is flat. Assuming that interest rates in the economy are expected to remain at their current level, what is the best estimate of the nominal interest rate on the new bonds? Please show all work!!
Submitted: 7 years ago.
Category: Finance
Expert:  Annie Kavitha replied 7 years ago.

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