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Disney has just issued a 16-year bond to finance its digital strategy. The face value...

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Finance

Disney has just issued a 16-year bond to finance its digital strategy. The face value of the bond is 1,000$. The bond is based in USA and pays coupon semi-annually; being the annualized coupon yield 2.4%. The current interest rate for this bond is 0.95% in semi-annual terms.

Please calculate:

  1. PV of the bond

  2. If the bond is quoted in the market at 1,050$, will you recommend the purchase?

  3. Is the bond a discount, par or premium bond?

  4. If you expect the annual interest rates to increase by 1%, what would you recommend doing?

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