If you have a coupon bond, its face value is $1,000 and the coupon rate is 4%. Complete the following table, then calculate the rate of return for the bond. If you know that it was purchased at the nominal value, comment on the results. due date return at maturity the price 2 0.02 3 0.04 5 0.06 Present Value Annuity value % n value % n 0.961 0.02 2 1.97 0.02 2 0.925 0.04 2 1.89 0.04 2 0.889 0.04 3 2.78 0.04 3 0.906 0.02 5 4.71 0.02 5 0.747 0.06 5 4.21 0.06 5
If you have a coupon bond, its face value is $1,000 and the coupon rate is 4%. Complete the following table, then calculate the rate of return for the bond. If you know that it was purchased at the nominal value, comment on the results. due date return at maturity the price 2 0.02 3 0.04 5 0.06 Present Value Annuity value % n value % n 0.961 0.02 2 1.97 0.02 2 0.925 0.04 2 1.89 0.04 2 0.889 0.04 3 2.78 0.04 3 0.906 0.02 5 4.71 0.02 5 0.747 0.06 5 4.21 0.06 5
Chapter14: Investing In Stocks And Bonds
Section: Chapter Questions
Problem 7DTM
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Question
If you have a coupon bond, its face value is $1,000 and the coupon rate is 4%. Complete the following table, then calculate the
due date | return at maturity | the price | |||
2 |
0.02 |
||||
3 |
0.04 |
||||
5 |
0.06 |
||||
Present Value |
|
||||
value |
% |
n |
value |
% |
n |
0.961 |
0.02 |
2 |
1.97 |
0.02 |
2 |
0.925 |
0.04 |
2 |
1.89 |
0.04 |
2 |
0.889 |
0.04 |
3 |
2.78 |
0.04 |
3 |
0.906 |
0.02 |
5 |
4.71 |
0.02 |
5 |
0.747 |
0.06 |
5 |
4.21 |
0.06 |
5 |
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