A 10,000 Par Disney bond has a 4% coupon and will mature in 10 years. If its yielding (YTM) 5% what will be today's price? all cash flows at teh end of the per
A 10,000 Par Disney bond has a 4% coupon and will mature in 10 years. If its yielding (YTM) 5% what will be today's price? all cash flows at teh end of the per
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 8P
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Question
A 10,000 Par Disney bond has a 4% coupon and will mature in 10 years.
If its yielding (YTM) 5% what will be today's price?
all cash flows at teh end of the period!
Expert Solution
Step 1 Analysis
The price of bond will be the present value of all coupons and present value of face value at receivable at the time of maturity.
where
C= coupon payment
r= YTM
FV =Face/Par value
n=number of periods
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