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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 2P

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Question

A 5-year government bond has a face value of £1,000 and an annual nominal coupon
rate of 8%. Assume that the relevant nominal market interest rate (annualized) is equal
to 10%. The coupon payments are made quarterly.
(a) Calculate the present value of the bond and the effective market interest rate.

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I meant I think the answer for present value is wrong, when I solve it on excel it gives me a different answer.

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Follow-up Question

I think the answer for the effective market interest rate is wrong. Can you check it for me please? Because it is 5 years bond and if there is quarterly interest payment, should "n" so, number of periods not be 20 instead 4?

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