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Bond Pricings

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Bonds are currently trading with a yield to maturity of 7.5423%. You are trying to sell a bond with a coupon rate of $89. Assuming 6 years remain in the life of the bond:

a) What is the current market price of your bond?
b) What is the current market price of your bond if the market rate is 12.8945%?

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Solution Summary

This solution determines the current market price of the bond, present price of the bond and the new adjusted present value. All steps are shown with formulas.

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a) What is the current market price of your bond?
For this bond, FV = 1000
annual coupon payment is PMT = 89
number of years = 6
required ...

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