An investor is interested in buying a corporate bond with a face value of $1,000, AA rating, and a 10-year maturity. The bond has an annual coupon of 3.00%, payable semiannually. What is the current price of the bond? see attached information

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 8P
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An investor is interested in buying a corporate bond with a face value of $1,000, AA rating, and a 10-year maturity.  The bond has an annual coupon of 3.00%, payable semiannually.

What is the current price of the bond?

see attached information

 

Treasury Yield Curve (annual percentages)
2 years 5 years 10 years 20 years 30 years
Yield to Maturity
0.485%
L166%
1.569%
1976%
1.995%
Implied Spreads above Treasuries (in annual percentages)
2 years 5 years 10 years 20 years 30 years
US Treasury
Corporate Bonds
AAA
0.100%
0.150%
0.250%
0.400%
0.950%
AA
0.150%
(220%
0.600%
580%
A
0.250%
0.350%
1150%
1400%
1820%
BBB
0.650%
1450%
1.750%
2.060%
2620%
Transcribed Image Text:Treasury Yield Curve (annual percentages) 2 years 5 years 10 years 20 years 30 years Yield to Maturity 0.485% L166% 1.569% 1976% 1.995% Implied Spreads above Treasuries (in annual percentages) 2 years 5 years 10 years 20 years 30 years US Treasury Corporate Bonds AAA 0.100% 0.150% 0.250% 0.400% 0.950% AA 0.150% (220% 0.600% 580% A 0.250% 0.350% 1150% 1400% 1820% BBB 0.650% 1450% 1.750% 2.060% 2620%
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