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1. A 25-year maturity mortgage-backed bond is issued. The bond has a par value of $10,000 and promises to pay an 8 percent annual coupon.
1. A 25-year maturity mortgage-backed bond is issued. The bond has a par value of $10,000 and promises to pay an 8 percent annual coupon. Assume that 20 years after the bond is issued, bond market investors require a 15 percent interest rate on the bond. What is the market price of the bond? (C) (A) $6,835 (B) $6,863 (C) $7,653 (D) $14,270
1. A 25-year maturity mortgage-backed bond is issued. The bond has a par value of $10,000 and promises to pay an 8 percent annual coupon. Assume that 20 years after the bond is issued, bond market investors require a 15 percent interest rate on the bond. What is the market price of the bond? (C)
(A) $6,835
(B) $6,863
(C) $7,653
(D) $14,270
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Cornerstones Of Cost Management
Authors: Don R. Hansen, Maryanne M. Mowen
3rd Edition
9781305147102, 1285751787, 1305147103, 978-1285751788
