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27. A 7 percent $1,000 bond matures in 4 years, pays interest semiannually, and has a...

27. A 7 percent $1,000 bond matures in 4 years, pays interest semiannually, and has a yield to maturity of 7.85 percent. What is the current market price of the bond?

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Answer #1

The formula of calculating current market price of the bond is:

B0 is the Bond Price

C is the coupon payment

r is the interest rate

F is the face value

t is the time period

Current price of the bond is $971.306

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