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

EBK CONTEMPORARY FINANCIAL MANAGEMENT
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Chapter6: Fixed-income Securities: Characteristics And Valuation
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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.

Bond price =C1-1(1+r)nr+FV(1+r)n

where

C= coupon payment

r= YTM

FV =Face/Par value

n=number of periods 

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