BOND VALUATION Bond X is noncallable and has 20 years to maturity, a 8% annual coupon, and...

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BOND VALUATION
Bond X is noncallable and has 20 years to maturity, a 8% annualcoupon, and a $1,000 par value. Your required return on Bond X is8%; if you buy it, you plan to hold it for 5 years. You (and themarket) have expectations that in 5 years, the yield to maturity ona 15-year bond with similar risk will be 10%. How much should yoube willing to pay for Bond X today? (Hint: You will need to knowhow much the bond will be worth at the end of 5 years.) Do notround intermediate calculations. Round your answer to the nearestcent.
$

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To find out the amount that we will be willing to pay today we need to find out the value of bond today Given Time to maturity n 20 years Annual coupon 8 81000 80 Par value 1000 Required See Answer

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BOND VALUATIONBond X is noncallable and has 20 years to maturity, a 8% annualcoupon, and a $1,000 par value. Your required return on Bond X is8%; if you buy it, you plan to hold it for 5 years. You (and themarket) have expectations that in 5 years, the yield to maturity ona 15-year bond with similar risk will be 10%. How much should yoube willing to pay for Bond X today? (Hint: You will need to knowhow much the bond will be worth at the end of 5 years.) Do notround intermediate calculations. Round your answer to the nearestcent.$