Question: Example 9 . Bond Valuation and Interest Rate Impact Question: Praveen Company issued a $ 1 , 0 0 0 face value bond with a

Example 9. Bond Valuation and Interest Rate Impact
Question: Praveen Company issued a $1,000 face value bond with a coupon rate of 6%, payable semi-annually, and a maturity of 10 years. The market interest rate at the time of issuance was 5%. Calculate the bonds price at issuance. If the market interest rate increases to 7% one year later, what will be the new price of the bond? Provide detailed calculations and explanations for each step.

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