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Bond Calculation: Assume par values of $1,000 unless otherwise instructed (a) What is the price of a 10 year bond (annual payments) with a coupon

Bond Calculation:

Assume par values of $1,000 unless otherwise instructed

(a) What is the price of a 10 year bond (annual payments) with a coupon rate of 7% if the market rates are 8%? Is the bond selling at a premium or discount?

(b) Re-compute if the coupon is semi-annual payments.

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