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Calculate the price at which you will sell the bond

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Question - Colours Company 10% coupon bonds pay interest annually. When you bought one of these bonds, it had 20 years to maturity, and the appropriate discount rate was 8%. After one year, the discount rate on such bonds is 7%. You are considering to sell the bond.

Required -

a) Calculate the price at which you bought the bond.

b) Calculate the price at which you will sell the bond after one year.

c) Will you be happy with this investment? Explain.

Reference no: EM132563158

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