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?
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
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