A) A bond offers a coupon rate of 9%, paid annually, and has a maturity of...

A) A bond offers a coupon rate of 9%, paid annually, and has a maturity of 14 years. The current market yield is 10%. Face value is $1,000. If market conditions remain unchanged, what should the price of the bond be in 1 year? Assume the market yield remains unchanged.

B) A bond currently trades at a price of $852.72 in the market. The bond offers a coupon rate of 7%, paid annually, and has a maturity of 15 years. Face value is $1,000. What is the bond's Current Yield?

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Expert Solution

A). After one year, the number of periods to maturity will be 13 years. The price of Bond is calculated in excel below using PV function:

jeff jeffy answered 1 year ago

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