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Consider a bond with the following characteristics. Par: $1,000 Two coupon payments per year (i.e., coupons...

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Finance

Consider a bond with the following characteristics. Par: $1,000Two coupon payments per year (i.e., coupons are paid semi-annually)Coupon rate: 7.50% Years to maturity: 40 Bond price: $965 Supposethat the annual market interest rate for this bond drops by 1%.What is the new bond price? Note: recall that the annualyield-to-maturity (YTM) is the market interest rate on the bond.$965.00 $858.33 $1,097.93

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Step1 The Yield to maturity of YTM of the Bond The Yield to maturity of YTM of the Bond is calculated using financial calculator as follows Normally the YTM is calculated either using EXCEL Functions or by using Financial Calculator Variables Financial Calculator Keys Figure Face Value 1000 FV 1000 Coupon    See Answer
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Consider a bond with the following characteristics. Par: $1,000Two coupon payments per year (i.e., coupons are paid semi-annually)Coupon rate: 7.50% Years to maturity: 40 Bond price: $965 Supposethat the annual market interest rate for this bond drops by 1%.What is the new bond price? Note: recall that the annualyield-to-maturity (YTM) is the market interest rate on the bond.$965.00 $858.33 $1,097.93

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