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Suppose that a 15-year $1000-face value government (risk-free) coupon bond with 8% coupon payments (paid annually) is currently selling at par. ABC Companys bonds are
Suppose that a 15-year $1000-face value government (risk-free) coupon bond with 8% coupon payments (paid annually) is currently selling at par. ABC Companys bonds are rated AA, and the credit spread on these bonds is 3%. At what price would you be willing to purchase a 15-year ABC Company bond with a $1000-face value if it offers 8% coupon payments (paid annually)? Show your calculations and explain your result.
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