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Business, 19.02.2020 23:26 mlittleduck6947

7-14 EXPECTED INTEREST RATE Lloyd Corporation’s 14% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 30 years, are callable 5 years from today at $1,050. They sell at a price of $1,353 54, and the yield curve is flat. Assume that interest rates are expected to remain at their current level. a. What is the best estimate of these bonds’ remaining life? b. If Lloyd plans to raise additional capital and wants to use debt financing, what coupon rate would it have to set in order to issue new bonds at par?

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7-14 EXPECTED INTEREST RATE Lloyd Corporation’s 14% coupon rate, semiannual payment, $1,000 par valu...
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