Sleeping beauty bonds questions
Question # 00766635
Posted By:
Updated on: 06/24/2020 06:37 AM Due on: 06/26/2020
Sleeping Beauty Bonds Questions
1. Suppose on the date the bond were sold, the prevailing interest rate increased by 1%, from 7.55% to 8.55%.
a. What events might cause such a change?
b.What would be the new price of the bond?
2. Sleeping Beauty Bonds actually contain a call provision that Walt Disney can buy back the bonds by paying 103.02% of the face value to the holders. Disney can use this right on 2023, July 15th, which is 30 years from the issue date.
a.What would be the reason that Disney inserted this provision to the bond?
b. Would including this provision make the bond more expensive, or cheaper?
-
Rating:
/5
