Bond Questions
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9. A bond with a face value of $1000 has a current yield of 7% and a coupon rate of 8%. What is the bond's price?
10. A Corporate bond carries a coupon rate of 8%, has 9 years to maturity, and sells at a yield to maturity of 7%. A) What interest payments do bondholders receive each year? B) At what price does the bond sell, assuming annual interest payments?
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Solution Summary
The solution explains how to calculate the bond price and the bond interest payments
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9. A bond with a face value of $1000 has a current yield of 7% and a coupon rate of 8%. What is the bond's price?
Current Yield = Annual Interest/Price
Annual Interest = 1,000X8% = $80
Price = Annual Interest/Current Yield ...
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