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Problem 2
A bond has a 10% coupon rate a $1,000 face value. Interest is paid semiannually, and the bond has 20 years to maturity.
(1) If investors require a 12% yield, what is the bonds value at issue?
(2) Will this issue be considered at a discount or at a premium or at par?
Note: The semiannual nature of the interest payment impacts the choice of factor when computing NPV.
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