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ABC Corporation intends to issue a bond with nominal yield of 2.2% and maturity of June...

ABC Corporation intends to issue a bond with nominal yield of 2.2% and maturity of June 30, 2030 on June 30, 2020. If equivalent bonds trade in the market at the yield of 2.2430%, ABC will issue the bond at the price of (. )dollars. What goes in the blank?

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Answer #1

Face value is assumed at $1,000. In the absence of information regarding coupon frequency, it is assumed that interest is paid annually. Coupon rate is given as 2.2% and the market interest rate on equivalent bond at 2.2430% is treated as YTM.

Issue price= $ 996.19 calculated using PV function of Excel as follows:

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