A bond that matures in 12 years has a par value of $1000 and an annual coupon rate of 10%. The market interest rate is 8%. What is its price? Is it a premium or discount bond?
Given,
Maturity (n) = 12 years
Par value = $1000
Coupon rate = 10%
Market interest rate (r) = 8% or 0.08
Solution :-
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