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You are considering buying a Stragen's Corp. bond with a $1000 face value, 16% semi-annual coupon...

You are considering buying a Stragen's Corp. bond with a $1000 face value, 16% semi-annual coupon that has 14 years left until maturity. The bond has a yield to maturity of 10%. What is the fair price of this bond?

$1,446.94

$1,191.85

$1,442.00

None of these

$668.47

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Answer #1

Fair price of the bond is calculated using the PV function as follows:-

=PV(rate,nper,pmt,fv)

=PV(10%/2,14*2,16%/2*1000,1000)

=1446.94

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