Case Analysis

1. Compute the yield to maturity of Land’o’Toys’ bonds before the purchase announcement and use it to determine the likely current bond rating. (Compare YTM to the table on p. 269).

2. How do the bond investors feel about the announced purchase of Land’o’Toys and why? How would you vote?

a b c Given,Face value of Land’o Toys BondCoupon rateFrequencyTime to maturityCurrent PriceYield to maturity = 6.00% Rating of the Bond on the basis of YTM = A Given,New rating of the bonds…

 

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