Consider a bond that promises to make coupon payments of $100 each year for three years (beginning in one year's time) and also repays the face value of $2000 at the end of the third year. If the market interest rate is 6%, what is the present value of this bond? (a) $1866.67 (b) 2055.50 (c) $1714.23 (d) 1895 (e) 1976.88
Consider a bond that promises to make coupon payments of $100 each year for three years (beginning in one year's time) and also repays the face value of $2000 at the end of the third year. If the market interest rate is 6%, what is the present value of this bond? (a) $1866.67 (b) 2055.50 (c) $1714.23 (d) 1895 (e) 1976.88
Chapter6: Bonds (debt) - Characteristics And Valuation
Section: Chapter Questions
Problem 8PROB
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