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Assume par value of $1,000. 1) What is the price of a 5-year bond (annual payments) with a coupon rate of 5% if the market

Assume par value of $1,000.

1) What is the price of a 5-year bond (annual payments) with a coupon rate of 5% if the market rates are 8%? Is the bond selling at a premium or discount?

2) Recompute the answer with assumption of semi-annual payments.

3) Recompute the answer with assumption of quarterly payments.

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