A 30-year 1000 par value bond has 95 annual payment coupon

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1. A 30-year, $1,000 par value bond has a 9.5% annual payment coupon. The bond currently sells for $875. If the yield to maturity remains at its current rate, what will the price be 9 years from now?

2. Knapp Bros, LLC is planning to issue new 20-year bonds. The current plan is to make the bonds non-callable, but this may be changed. If the bonds are made callable after 7 years at a 7% call premium, how would this affect their required rate of return?

Reference no: EM13478377

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