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Problem 13-06 Your broker offers to sell for $1,174 a AAA-rated bond with a coupon rate of 8 percent and a maturity of seven years.

Problem 13-06

Your broker offers to sell for $1,174 a AAA-rated bond with a coupon rate of 8 percent and a maturity of seven years. Given that the interest rate on comparable debt is 5 percent, calculate the bond's price. Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar.

$

Is your broker fairly pricing the bond?

-Select-YesNoItem 2 , so the bond -Select-shouldshould notItem 3 be purchased.

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