What is the market price of a bond with 10% coupon, 8 year maturity, yield 12%
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A $1,000 par bond having a 10% coupon rate and 8 years until maturity is selling to yield 12%. Interest is paid annually. Approximately what is the market price for this bond ?
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Solution Summary
The solution shows all the calculations necessary to arrive at the answer, plus there is sufficient narrative statements for a full understanding of the problem.
Solution Preview
The attached Excel spreadsheet provides the solution. Note, since the interest rate is higher than the coupon paid by the bond, the bond will always sell at a ...
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