TraChem Corporation issues Series Z bonds and Series C
bonds. Both bonds have par values of $10,000 and investors
trade both bonds at prices indicating a YTM of 5.0%. The Series Z
is a zero-coupon bond with a maturity in 10 years. The Series C,
maturing in 6 years, is a hybridized bond that pays no coupon for
the first year; then pays $300 every six months for three years
(six total payments), and finally makes four $700 payments in the
last two years.
What is the current price of a Series C bond? (Hint: Even if
you utilize formulas to solve this, you should lay out and discount
the stream of cash flows as a check on your work.)
A) $12,001.39
B) $11,169.71
C) $10,800.52
D) $10,849.99
E) $11,431.85
TraChem Corporation issues Series Z bonds and Series C bonds. Both bonds have par values of $10,000 and investors trade
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