Compute Bond Price Compute the price of a 6 percent coupon bond with 10 years left to maturity and a market interest rate of 8.75 percent. (Assume interest payments are semi-annual and par value is $1,000.) Is this a discount or premium bond?
A) discount
B) premium N = 20, I = 4.375, PMT = 30, FV = 1000 CPT PV = -819.19
Since this is less than $1,000, it is a discount bond.
Correct Answer:
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