Bond price and bond value are the same thing. The price an investor should pay for something should be (is) equal to its value. A bond with a coupon rate of 3.5% matures in 11 years. Yields are currently 3%. What is the price of the bond? Answer:

Bond price and bond value are the same thing. The price an investor should pay for something should be (is) equal to its value. A bond with a coupon rate of 3.5% matures in 11 years. Yields are currently 3%. What is the price of the bond? Answer:

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 4MC

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Question

Bond price and bond value are the same thing. The price an investor should pay for something should be (is) equal to its value.

A bond with a coupon rate of 3.5% matures in 11 years. Yields are currently 3%. What is the price of the bond?

Answer:

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

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