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Question 20.2: BOND PRICE OVER TIME Consider a bond that has a coupon rate ...

BOND PRICE OVER TIME

Consider a bond that has a coupon rate of 6% and is priced to yield 8%. If the bond’s par value is $1,000, what is the price of the bond if there is:

a. five years remaining to maturity?

b. 10 years remaining to maturity?

c. 20 years remaining to maturity?

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Inputs:

C = $60/2 = $30

M = $1,000

r = 8%/2 = 4%

a. $918.89

b. $864.10

c. $902.07

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