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ABC Company is issuing a new bond with a par value of $1000 and a coupon...

ABC Company is issuing a new bond with a par value of $1000 and a coupon rate of 6%. The time to maturity is 28 years and the Yield to Maturity is 5.2%. If coupon payments are semi-annual, what is today's price of this bond

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Answer #1

Bond Par Value = $1,000

Coupon Rate = 6% semi-annually

Time to Maturity = 28 years

YTM = 5.20%

Calculating Present Value of Bond,

Using TVM Calculation,

PV = [FV = 1000, T = 56, PMT = 30, I = 0.052/2]

PV = $1,117.30

So,

Bond Present Value = $1,117.30

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