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Compute its current price

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Reference no: EM132828051

Question - Suppose Gomas Enterprises has issued a bond that pays 11% interest ($55 semiannual coupons), and the current market yield is 9%.

(a) If the bond matures in 20 years, compute its current price.

(b) What if the bond matures in 1 year?

(c) What do you notice when comparing the 2 prices and their components?

Explain what types of individual investor would be interested in bonds, as opposed to putting their money into stocks or savings accounts.

Reference no: EM132828051

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