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    Bond valuation of a broker

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    Broker quotes bond at $1180, $1000 par value bond pays 14 percent interest, has 25 years until maturity. Current yield to maturity is 12 percent. Compute new price of bond, is it overpaid in marketplace?

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    Solution Preview

    The price of the bond should be the present value of interest and the principal. The annual interest is $140 and is an annuity and so we ...

    Solution Summary

    The solution explains how to determine the price of a bond.