Assume a $1,000 face value bond has a coupon rate of 8 percent, pays interest semi-annually, and has an eight-year life. If investors are willing to accept a 10 percent rate of return on bonds of similar quality, what is the present value or worth of this bond?
Assume a $1,000 face value bond has a coupon rate of 8 percent, pays interest semi-annually, and has an eight-year life. If investors are willing to accept a 10 percent rate of return on bonds of similar quality, what is the present value or worth of this bond?
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 4P
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Assume a $1,000 face
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