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Selling price of a bond- Finance

Business & Finance
Tutor: None Selected Time limit: 0 Hours

A $1,000 corporate bond with 20 years to maturity pays a coupon of 7% (semi-annual) and the market required rate of return is 6.6%. What is the selling price?

Feb 26th, 2015

Coupon per perid received = $35

Rate of return = 0.066

Present value of such payments of coupons = pv(0.033,40,-35)=$771.18

Present value of principal = 1000*(1.033)^(-40) =$252.57

Total =$1023.75 


Feb 26th, 2015

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