Manufacturing Company has a large number of ten-year $1,000 face value bonds on the market with a 7 percent coupon paid annually and an 8 percent yield to maturity. Which of the following would be the current price of an individual $1,000 bond?
They explain the answer ($932.91) by calculating two cash flows and adding them together. How do they get the cash flows? It seems that this would be obvious, but I have not been able to determine their process.
Thanks!
They explain the answer ($932.91) by calculating two cash flows and adding them together. How do they get the cash flows? It seems that this would be obvious, but I have not been able to determine their process.
Thanks!
CPCU 540 Question
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