Question

Asked Jan 20, 2020

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Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%.

What was the price of this bond when it was issued?

Step 1

The formula to calculate price of bond is given below,

Step 2

Substitute $70 for coupon payment, 10 for *n*, 0.06 fo...

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