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A bond's current dollar price is $1,000, the same as its par value. The bond has...

A bond's current dollar price is $1,000, the same as its par value. The bond has 20 years to maturity and a 6% coupon rate. The bond makes semiannual coupon payments. What is the bond’s yield to maturity?

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Answer #1

Answer: 6%

Bond's current price is equal to par value. Based on the principles of bond pricing, yield to maturity on the bond is equal to coupon rate, when price of a bond is equal to its par value.

Bond pricining pricniples:

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