Calculate the fair present values of the following bonds, all of which pay interest semiannually, have a face value of $1,000, have 12 years remaining to maturity, and have a required rate of return of 10 percent. The bond has a 6 percent coupon rate. The bond has a 8 percent coupon rate. The bond has a 10 percent coupon rate. What do your answers to parts (a) through (c) say about the relation between coupon rates and present values?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 11P
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Calculate the fair present values of the following bonds, all of which pay interest semiannually, have a face value of $1,000, have 12 years remaining to maturity, and have a required rate of return of 10 percent.

  1. The bond has a 6 percent coupon rate.
  2. The bond has a 8 percent coupon rate.
  3. The bond has a 10 percent coupon rate.
  4. What do your answers to parts (a) through (c) say about the relation between coupon rates and present values?
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