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Suppose Microsoft issues a 7% coupon bond withsemiannual payments, a maturity of 20 years and a face value of $1,000. What is the current market value of the bond? Assume the appropriate market rate of return is 8%.

$258.42
$901.82
$901.04
$463.40

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Deanna Hettinger
Deanna HettingerLv2
28 Sep 2019

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(DO NOT USE EXCEL) Ford is about to issue a new corporate bond, face value= $1,000, coupon rate= 8% (annual), term to the maturity= 4 years. You know that a very similar bond issued by GM is already being traded in a bond market with its market price of $1,020, face value= $1,000, coupon rate= 6% (annual) and term to the maturity= 4 years. What would be the appropriate value of Ford's new corporate bond? (Assume that coupons are paid annual for Ford and GM bonds) (DO NOT USE EXCEL)

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