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A bond was issued five years ago with 20 years to maturity carrying 8 percent coupon rate and a market rate of 9%. The issuers

A bond was issued five years ago with 20 years to maturity carrying 8 percent coupon rate and a market rate of 9%. The issuer’s financial performance has deteriorated significantly and the premium for the possibility of bankruptcy has changed from 3 percent to 5 percent. What is the current price of this bond if the interest is paid annually?

  1. Calculate yield to maturity for a bond that is trading at $890 carrying a coupon rate of 7.5 percent with 10 years left to maturity.

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