A friend of yours just invested in an outstanding bond with a 5% annual coupon and a remainingmaturity of 10 years. The bond has a par value of $1,000, and the market interest rate is currently7%. How much did your friend pay for the bond? Is it a par, premium, or discount bond?

Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter5: Bonds, Bond Valuation, And Interest Rates
Section: Chapter Questions
Problem 11P: Goodwynn & Wolf Incorporated (G&W) issued a bond 7 years ago. The bond had a 20-year maturity, a 14%...
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A friend of yours just invested in an outstanding bond with a 5% annual coupon and a remaining
maturity of 10 years. The bond has a par value of $1,000, and the market interest rate is currently
7%. How much did your friend pay for the bond? Is it a par, premium, or discount bond?

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