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ABC Company issues 5-year bonds with a face value of $1,000 paying interest semi-annually at a rate of 4% annually. Current interest rates are 5%(20

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ABC Company issues 5-year bonds with a face value of $1,000 paying interest semi-annually at a rate of 4% annually. Current interest rates are 5%(20 pts, total) Calculate the semi-annual coupon payment on the bond (3 pts.) Calculate the intrinsic value of the bond (10 pts.) If the market is currently selling this bond for $085, should you buy it? Why or why not? (4 pts.) If interest rates drop from 5% to 2%, what would we expect to happen to the price of the bond? (3 pts.)

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