What is the price of a two year bond with a 9% annual coupon and a yield to maturity of 8%?
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Step 1
The bond will pay a 9% coupon twice a year for two years and the face value at the end of two years. The present value of the bond's cash flows is calculated as follows: PV = C * (1 - (1 + r)^-n) / r + FV / (1 + r)^n where: - PV is the present value or price of Show more…
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