About the bond valuation, Bond X is noncallable and has 20

About the bond valuation

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Reference no: EM131300309

Bond valuation

Bond X is noncallable and has 20 years to maturity, a 10% annual coupon, and a $1,000 par value. Your required return on Bond X is 8%; and if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years the yield to maturity on a 15-year bond with similar risk will be 10.5%. How much should you be willing to pay for Bond X today? (Hint: You will need to know how much the bond will be worth at the end of 5 years.) Do not round intermediate calculations. Round your answer to the nearest cent.

Reference no: EM131300309

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