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Problem 13-01 A $1,000 bond has a coupon of 9 percent and matures after ten years. Assume that the bond pays interest annually. a. What
Problem 13-01 A $1,000 bond has a coupon of 9 percent and matures after ten years. Assume that the bond pays interest annually. a. What would be the bond's price if comparable debt yields 10 percent? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ b. What would be the price if comparable debt yields 10 percent and the bond matures after five years? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ c. Why are the prices different in a and b? The price of the bond in a is less than the price of the bond in b as the principal payment of the bond in a is further out than the principal payment of the bond in b (in time). d. What are the current yields and the yields to maturity in a and b? Round your answers to two decimal places. The bond matures after ten years: CY: % YTM: % The bond matures after five years: CY: % YTM: %
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