What is the current price of a bond matures in 9.5 years, a yield to maturity of 8.2 percent, and a coupon rate of 7.5 percent? Assume that this bond has a $1,000 face value and pays interest semiannually.

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To find the current price of the bond, we use the formula for the present value of a bond, which takes into account the present value of the annuity (coupon payments) and the present value of the face value (lump sum payment at maturity). Given that the bond pays semiannually, we adjust the yield to maturity (YTM) and the number of periods accordingly.The semiannual YTM = 8.2% / 2 = 4.1%The number of semiannual periods = 9.5 years * 2 = 19 periodsThe semiannual coupon payment = (7.5% / 2) * $1,000 = $37.50The present value of the annuity (coupon payments) = $37.50 * [1 - (1 + 0.041)^-19] / 0.041The present value of the face value = $1,000 / (1 + 0.041)^19Adding these two components gives the current price of the bond, which is approximately $954.42.

What Is the Current Price of a Bond Matures in 9.5