Calculate the price of a 6.5 percent coupon bond with 27 years left to maturity and a market interest rate of 5 percent. (Assume interest payments are semiannual and par value is $1,000.) Is this a discount or premium bond?
A) $982.03; discount
B) $1,010.59; discount
C) $1,220.93; premium
D) $1,315.62; premium
Correct Answer:
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