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GMAC has many different issues of bonds outstanding.




A quick look at bond quotes will tell you that GMAC has many different;issues of bonds outstanding. Suppose that four of them have identical coupon rates of;7.25% but mature on four different dates. One matures in 2 years, one in 5 years, one in;10 years, and the last in 20 years. Assume that they all made coupon payments yesterday.;a. If the yield curve were flat and all four bonds had the same yield to maturity of 9%;what would be the fair price of each bond today?


Paper#25473 | Written in 18-Jul-2015

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