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    Estimating bond's fair price

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    Assume that you wish to purchase a 10-year bond that has a maturity value of $1,000 and makes semiannual interest payments of $50. If you require a 10 percent nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

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    Solution Preview

    Maturity Value=M=$1000
    Interest Payments=C=$50 per period (semiannual)
    Number ...

    Solution Summary

    Solution explains the formula and methodology to estimate fair price of a coupon paying bond.

    $2.19

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