A bond with a $1,000 par value has an 8 percent annual coupon rate. It will mature in 4 years, and annual coupon payments are made at the end of each year. Present annual yields on similar bondsare 6 percent. What should be the current price?

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The current price of the bond can be calculated using the present value of its future cash flows, which include the annual coupon payments and the par value at maturity. The formula for the present value of a bond is: $$ P = \sum \left( \frac{C}{(1 + r)^t} \right) + \frac{F}{(1 + r)^n} $$Where:- $ C $ is the annual coupon payment ($1,000 * 8% = $80)- $ r $ is the yield (6% or 0.06)- $ F $ is the face value ($1,000)- $ n $ is the number of years to maturity (4)Calculating this gives a price of approximately $1,069.31.

A Bond with a $1,000 Par Value Has an 8