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Wine and Roses, Inc., offers a bond with a coupon of 8.5 percent with semiannual payments and a yield to maturity of 9.20 percent. The bonds mature in 6 years. What is the market price of a $1,000 face value bond?

Respuesta :

The market price of a $1000 face value bond is $968.27

Explanation:

N = 9*2

N=18

CPT = I/Y  

CPT = 9.20/2  

CPT =  4.6  

PMT = 1000(0.085/2)

PMT= 42.5

FV = 1000

PV=

42.5* (0.417/0.046)+1000/1.715

Present value = $968.27

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