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Suppose that you purchased a Baa rated $1000 annual coupon bond with an 7.8% coupon rate and a 19-year maturity at par value. The current
Suppose that you purchased a Baa rated $1000 annual coupon bond with an 7.8% coupon rate and a 19-year maturity at par value. The current rate on 19-year US treasuries is 3%. Two years later, you look in the newspaper, and find that the yield on comparable debt is 7.080%, how much is the bond currently worth?
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