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Linnell Corp. has a $1,000 par value bond with an 7% coupon rate (paid semiannually) and a ten year maturity. Let's assume that the market
Linnell Corp. has a $1,000 par value bond with an 7% coupon rate (paid semiannually) and a ten year maturity. Let's assume that the market believes the Yield to Maturity on this bond should be 4%. Assuming that the bond was just issued, calculate the current market price of the bond. Please round to the nearest dollar. What would be the price of a similar, just-issued bond with zero coupon? Please round to the nearest dollar. $ Returning to the original bond problem (with a 7% coupon), what is the present value of the future coupon payments? Please round to the nearest dollar. Let's say you want to calculate the price of a similar bond that was issued six years ago. How would you change your method of calculating the price? A. Change the value of "n" to 8 O B. Change the value of "n" to 12 C. Don't do anything differently D. Change the value of "n" to 6
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