Question: Consider a $1,000 par value bond with a 7% annual coupon. The bond pays interest annually. There are 20 years remaining until maturity. You have

Consider a $1,000 par value bond with a 7% annual coupon. The bond pays interest annually. There are 20 years remaining until maturity. You have expectations that in 5 years the YTM on a 15-year bond with similar risk will be 7.5%.

What is the expected bond value in 5 years?

a.$ 949

b.$1153

c.$1042

d.$1132

e.$ 956

Continued from previous question:

You plan to purchase the bond now and hold it for 5 years.Your required return on this bond is 10%.How much would you be willing to pay for this bond today?

Select one:

a.$859

b.$1042

c.$875

d.$820

e.$956

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