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QUESTION
Find the price of a corporate bond maturing in 5 years that has a 5 percent coupon (annual payments), a $1000 face value, and an AA rating.
Find the price of a corporate bond maturing in 5 years that has a 5 percent coupon (annual payments), a $1000 face value, and an AA rating. A local newspaper’s financial section reports that the yields on 5-year bonds are: AAA, 6 percent; AA, 7 percent; and A, 8 percent.
