Staind, Inc, has 7 percent coupon bonds on the market that have 8 years left to maturity.

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Question

Staind, Inc, has 7 percent coupon bonds on the market that have 8 years left to maturity.

Staind, Inc, has 7 percent coupon bonds on the market that have 8 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 11 percent, what is the current bond price?

$794.16
$1,03000
$754.45
$1,242.85
$833.86

business finance

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Answer 1

Answer #1

Face Value, FV = $ 1000

Annual coupon, C = 7% x Face Value = 7% x 1000 = $ 70

Time to maturity, N = 8 years

Yield to maturity, y = 11%

Frequency = Annual, once in a year

Price of the bond = Present value of all the future coupon payments and repayment

= $ 794.16

Hence, the first option is the correct answer.

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Answer 2

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