Consider investing your savings in a coupon bond with the following properties: Maturity: 5 years Face value: $10,000 Coupon rate: 4% (makes coupon payments every 6 months until the end of the maturity period) If the price of this coupon bond is $12,000 today, does it make sense to buy this bond? You can assume the risk free rate will be 2% until the bond reaches maturity.
Consider investing your savings in a coupon bond with the following properties: Maturity: 5 years Face value: $10,000 Coupon rate: 4% (makes coupon payments every 6 months until the end of the maturity period) If the price of this coupon bond is $12,000 today, does it make sense to buy this bond? You can assume the risk free rate will be 2% until the bond reaches maturity.
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 17P
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Consider investing your savings in a coupon bond with the following properties:
- Maturity: 5 years
- Face value: $10,000
- Coupon rate: 4% (makes coupon payments every 6 months until the end of the maturity period)
If the price of this coupon bond is $12,000 today, does it make sense to buy this bond? You can assume the risk free rate will be 2% until the bond reaches maturity.
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