A coupon bond that pays interest annually,has a par value of $1,000,matures in 5 years,and has a yield to maturity of 10%.The intrinsic value of the bond today will be _________ if the coupon rate is 12%.

Question

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The intrinsic value of the bond is calculated using the present value of future cash flows, which include annual coupon payments and the par value at maturity. With a coupon rate of 12%, the annual coupon payment is $120. Using a yield to maturity of 10%, the present value of these cash flows is approximately $1,075.82.

A Coupon Bond That Pays Interest Annually,has a Par Value