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Bond valuation

A $1,000 par value bond pays $50 in interest every six months. What will be the value of the bond if it matures in 30 months and the yield-to-maturity of similar risk bonds is 8%?

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Solution Preview

Value of bond = Present value of the payoffs
The discount rate is 8/2=4% ...

Solution Summary

Bond valuation is determined.

$2.19