Texts: A bond with a face value of $1,000 has a current yield of 7.0% and a coupon rate of 9.0%. a) If interest is paid annually, what is the bond's price? b) If the bond is selling at $960, is its yield to maturity more or less than 9.0%?
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The annual interest payment can be calculated using the coupon rate and the face value of the bond. The coupon rate is 9.0% and the face value is $1,000, so the annual interest payment is 9.0% of $1,000, which is $90. Show more…
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