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    Price of the annual coupon bond

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    A company has outstanding bonds with a 6 year maturity, $1,000 par value and 7% coupon paid semiannually and those bonds sell at their par price. This same company has another bond with the same risk, maturity and par value but this second bond pays a 7% annual coupon. What is an estimate of the price of the annual coupon bond?

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    Price of the annual coupon bond

    A company has outstanding bonds with a 6 year maturity, $1,000 par value and 7% coupon paid ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer what is an estimate of the price of the annual coupon bond.

    $2.19

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