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    Bond Yield and Interest

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    1. 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?

    2. 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 Preview

    1. Current Yield = Coupon Interest/Price
    Coupon interest = 1,000X8% = 80
    Price = Coupon Interest/Current Yield = ...

    Solution Summary

    The solution explains how to calculate the price of a bond and the interest payments from the bond.