A perpetual bond pays a coupon of 25 per year if in year 1


A perpetual bond pays a coupon of $25 per year.

a. If in year 1 this bond sells for $200, what is its yield to maturity?

b. If interest rates move to 20% next year, what will this bond sell for?

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Financial Management: A perpetual bond pays a coupon of 25 per year if in year 1
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