Bond valuation example problem

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Bond Valuation Example Problem

Suppose that Diversified Technology has a B-rated bond with exactly 30 years until maturity, a face value of $1000 and a semiannual coupon rate of 6%. The yield to maturity on B-rated bonds today is 10 percent.

a. What is the price of this bond today?

b. Assuming the YTM remains constant, what is the price of the bond immediately before and after it makes its next coupon payment?

Reference no: EM131020058

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