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    PRICE OF BONDS

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    A firm plans to issue bonds with a par value of $1,000 and 20 years to maturity. The bonds have a 5.5% annual coupon. What is the maximum an informed investor would pay for these bonds if the investor's required rate of return of 5%?

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    Bond Valuation - Premium, please see attachment.

    Bond Valuation
    A firm plans to issue bonds with a par value of $1,000 and 20 years to maturity. The bonds ...

    Solution Summary

    A firm plans to issue bonds with a par value of $1,000 and 20 years to maturity. The bonds have a 5.5% annual coupon. What is the maximum an informed investor would pay for these bonds if the investor's required rate of return of 5%?

    $2.19

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