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James Corporation issued a new bond - series 007, called James Bond 007 on January 1, 2005. You bought that bond on the day of issue. It had following characteristics: Maturity term= 25 years, Coupon annual, Face Value-$1,000. The Yield at the time of purchase was 10%. 2. 5%, semi On July 1,2015, James Corporation filed for bankruptcy. And, as part of the bankruptcy deal (worked with the help of US and British Government) the bond was renegotiated as follows. Beginning July 1, 2015 no interest will be paid for next 3 years Afterwards, interest will be paid at 50% of the original coupon interest for the next 5 years. Afterwards, for the reminder of the term full original interest will be restored. There would not be any change to the face value of the bond. . . Determine the following a) Today is 1-1-2030, and the bond matured yesterday. James Corporation paid all the coupons and the face value as per the renegotiated contract. What is true yield earned by you for the bond that you purchased January 1, 2005? b) Soon after the bankruptcy declaration on July 1, 2015, the yield to maturity on the bond jumped to 13%. What was the bond trading on that day? c) Assuming you sold the bond on July 1, 2015 in the market place, what would have been your HPY

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