Morgan Would Like to Purchase a Bond That Has a Par

question 45

Multiple Choice

Morgan would like to purchase a bond that has a par value of $1,000, pays $80 at the end of each year in coupon payments, and has 10 years remaining until maturity. If the prevailing annualized yield on other bonds with similar characteristics is 6 percent, how much will Morgan pay for the bond?

• A)$1,000.00
• B)$1,147.20
• C)$856.80
• D)None of these are correct.

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