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 Summary
The solution explains how to calculate the price of a bond and the interest payments from the bond.
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1. Current Yield = Coupon Interest/Price
Coupon interest = 1,000X8% = 80
Price = Coupon Interest/Current Yield = ...
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