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Previous Page Next Page Note: It is recommended that you save your response as you complete each question. Page 29 of 34 Question 29 (3.5 points) Calculate the current price of a $5,000 par value bond that has a coupon rate of 16 percent, pays coupon interest qu (i.e., 4 times per year), has 30 years remaining to maturity, and has a (Round your answer to 2 decimal places and record without dollar sign or commas). Your Answer: Answer Save Page 29 of 34 Previous PageNext Page e All Responses Go to Submit Quiz

Explanation / Answer

Par Value = $5,000

Coupon rate = 16%

Quarterly Coupon Payment = $5,000 × 16% / 4

= $20

Quarterly Coupon payment is $200.

Annual Currrent Yield = 22%.

Quarterly Currrent Yield = 22% / 4

= 5.50%

Current price of bond = Quarterly coupon payment / Quarterly Current Yield

= $200 / 5.50%

= $3,636.36

Current Price of bond is $3,636.36

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