How much should you be willing to pay for the bond

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Bond X is non callable and has 10 years to maturity, a 9% semi annual coupon, and a $1000 par value. Your required return on Bond X is 5%, and if you buy it, you plan to hold it for 3 years. You (and the market) have expectations that in 3 years, the yield to maturity on a 7 year bond with similar risk will be 4.5%. How much should you be willing to pay for the Bond X? Explain each step.

Reference no: EM131130239

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