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What is the price of a five-year bond with a $1,000 face value and a 5.0%...

What is the price of a five-year bond with a $1,000 face value and a 5.0% annual coupon rate that currently yields 7.0%? the bond pays annual coupons.

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Answer #1
Step-1:Calculation of coupon payment
Coupon payment = Face value * Annual coupon rate
= $       1,000 * 5.0%
= $             50
Step-2:Calculation of current price
Current price = Coupon payment/Current yield
= $             50 / 7.0%
= $     714.29
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