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What is the value of the first bond

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Reference no: EM133033851

Question - An investor purchased a ten-year bond with a face value of $5,000 seven years ago. The coupon rate is 10% and the discount rate is 5%. The investor now has an opportunity to purchase a second bond with a coupon rate of 15%. The discount rate of similar types of bonds has increased to 10%.

He plans on selling the first bond. What is the value of the first bond if it is sold to a new investor (remember to use the most recent discount rate in the calculation regardless of the original discount rate)?

Reference no: EM133033851

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