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Question 1: (10 points). (Bond valuation) Calculate the value of a bond that matures in 12 years and has $1,000 par value. The annual coupon interest rate is 9 percent and the markets required yield to maturity on a comparable-risk bond is 12 percent. Round to the nearest cent. The value of the bond is

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Answer #1

Using financial calculator
Input:

FV= 1000,

PMT=9%*1000 = 90,

N=12

I/Y =12

Find PV = $814.17

In excel it can be found using PV function

AutoSave Book1 - Excel 《Product Activation Failed) Sign in File Insert Page Layout Formulas Data Review View Help Tell me what you want to do 수 Share Home Calibri Currency 田FF Paste . 녀 . 의 _ . 로三들經垣臣 Merge & Center-5 . % , Conditional Fornat as Cell Insert Delete Fornat FormattingTable Styles- 、. Sort & Find & : Filter-Select- Clipboard Alignment Number Styles Cells Editing F5 x- fi -PV(12%,12,90,1000) 4 PV( 12%,12,90, 1000) 10 12 13 14 15 16 17 Sheet1 Ready + 100 cENG 1:50 AM

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