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The NYS Dormitory Authority issued bonds in 2007 to finance the renovation of a Building Hall....

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Finance

The NYS Dormitory Authority issued bonds in 2007 to finance therenovation of a Building Hall. The bonds have a coupon of 5.5% anda maturity date of 2026. If the current market interest rate is4.25%, how much would you be willing to pay for the bond – quotedin conventional bond pricing? Is this a premium or a discount?Why?

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Price of the Bond Price of the Bond is the Present Value of the Coupon Payments plus the Present Value of the Face Value Face Value of the bond 1000 Annual Coupon Amount 55 1000 x    See Answer
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The NYS Dormitory Authority issued bonds in 2007 to finance therenovation of a Building Hall. The bonds have a coupon of 5.5% anda maturity date of 2026. If the current market interest rate is4.25%, how much would you be willing to pay for the bond – quotedin conventional bond pricing? Is this a premium or a discount?Why?

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