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Homework answers / question archive / A friend of yours wants to invest in an outstanding bond with a 5% annual coupon and a remaining maturity of 10 years

A friend of yours wants to invest in an outstanding bond with a 5% annual coupon and a remaining maturity of 10 years

Finance

A friend of yours wants to invest in an outstanding bond with a 5% annual coupon and a remaining maturity of 10 years. The bond has a par value of $1,000, and the market interest rate is currently 7%. How much should your friend pay for the bond? Based on the price you calculate, is the bond a par, premium, or discount bond?

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