Simpson Industries Inc. bonds currently have 12 years remaining to maturity. What is the current price of the firm's semi-annual bonds if they carry a face value of $1,000, an annual coupon rate of 8% and an annual yield to maturity of 7%?
A) $924.64
B) $1,000.00
C) $1,079.43
D) $1,080.29
D
Explanation: D) Via Calculator: N = 12*2, I = 7/2, PMT = 40, FV = 1,000 Solve for PV = $1,080.29.
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