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Dufner Co. issued 15-year bonds one year ago at a coupon rate of 6.6 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.5 percent, what is the current dollar price assuming a par value of $1,000?

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Answer:

The answer is $1,106.43

Explanation:

Number of years is 28years[(15years - 1year) x 2]

Yield-to-maturity (YTM) is 2.75%(5.5% ÷ 2)

Present value(PV) = ?

Payment coupon(PMT) = $33[(6.6% ÷ 2) x $1,000]

Future Value(FV) = $1,000.

Using a Financial calculator;

Present value is $1,106.43