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(Solved): acific Wave Corp issued a $1,000 ordinary 20-year bond 5 years ago with a 12% coupon rate. The bond ...



acific Wave Corp issued a $1,000 ordinary 20-year bond 5 years ago with a 12% coupon rate. The bond pays interest semi-annually. Today similar bonds that are newly issued demand a coupon rate of 9% by the market. a. (10 pts) What is the price of the seasoned Pacific Wave bond today? b. (2 pts) What is the bond’s current yield? c. (6 pts) Explain the discrepancy between the current yield and the YTM? Or in other words, why are the two yields not equivalent?



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