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Bond X has 20 years to maturity, a 11% annual coupon, and a $1,000 par value. The market return on Bond X is 8%, and if you buy it you plan to hold it for 5 years.

You, and the market, have expectations that in 5 years the yield to maturity on a 15-year bond with similar risk will be 10.5%. How much should you be willing to pay for Bond X today?

 

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  • Category:- Basic Finance
  • Reference No.:- M9868075

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