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Question 3 Not yet answered Marked out of 25.00 p Flag question An annual bond has a face value of $1,000, makes an annual coupon
Question 3 Not yet answered Marked out of 25.00 p Flag question An annual bond has a face value of $1,000, makes an annual coupon payment of $25 per year, has a discount rate per year of 9.0%, and has 8 years to maturity. Calculate the bond price in three equivalent ways. a. First, calculate the bond price as the present value of the bond's cashflows the long way b. Second, use a formula for the bond price. c. Third, use Excel's PV function for a bond price. d. Calculate the bond price the long way if the yield to maturity changes grows by 10% each year. (25 marks)
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