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10 January, 09:47

What is the price of a $1,000 par value bond with an 8% coupon rate paid annually, and 6 years to maturity if the bond is currently sold at the yield-to-maturity of 7.32%? Round to the nearest cent. Do not a dollar sign in your answer.

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  1. 10 January, 09:48
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    The price of the bond is $1032.09

    Explanation:

    Annual coupon = $1000*8%

    = $80

    then the price of the bond is given by;

    price of bond = Annual coupon*Present value of annuity factor

    = $80*4.719814309 + $1000*0.654509592

    = $1032.09

    Therefore, The price of the bond is $1032.09
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