Assume that coupon payments are semi-annual

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Duke Power is about to issue a new 10 year bond with a coupon rate of 6.25%. The bond has been rated AA by Standard & Poor's. You observe that a similar bond, recently issued by a power company in Virginia is priced such that its yield-to-maturity is 5.80%. Using the yield-to-maturity of the similar bond, estimate what should be the appropriate price for the Duke Power bond. Assume that coupon payments are semi-annual.

Reference no: EM13849871

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