You are a new analyst at marshall capital and you are


You are a new analyst at Marshall Capital, and you are looking to purchase General Motors bonds for an investment. The bonds are currently selling for $1253 and have a yield to maturity of 8%. The bond will mature in 10 years and makes semiannual coupon payments.

In a year, suppose that investors gain confidence in the market and believe that it has come less risky. This results in a shift in the market rate from 8% to 6%.

a) What would you be willing to pay for the same bond?

b) Is the bond selling at a discount of premium?

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Financial Management: You are a new analyst at marshall capital and you are
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