Suppose a ten-year bond with a $10,000 face value pays a 5.0% annual coupon (at the end of the year), has 2 years left to maturity, and has a discount rate of 6.5%. Which of thé following would give you the present value - i.e. the price – of the bond? Select one: a. Present Value = Price = $10,500/(1.065)? b. Present Value = Price = [$500/(1.065)] + [$500/(1.065)²] + ... + [$500/(1.065)N,, where N= c. Present Value = Price = [$500/(1.065)] + [$500/(1.065)²] +I$10,000/(1.065)²] d. Present Value = Price = [$500/(1.065)] + [$500/(1.065)²]

Suppose a ten-year bond with a $10,000 face value pays a 5.0% annual coupon (at the end of the year), has 2 years left to maturity, and has a discount rate of 6.5%. Which of thé following would give you the present value - i.e. the price – of the bond? Select one: a. Present Value = Price = $10,500/(1.065)? b. Present Value = Price = [$500/(1.065)] + [$500/(1.065)²] + ... + [$500/(1.065)N,, where N= c. Present Value = Price = [$500/(1.065)] + [$500/(1.065)²] +I$10,000/(1.065)²] d. Present Value = Price = [$500/(1.065)] + [$500/(1.065)²]

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter27: Investment, The Capital Market, And The Wealth Of Nations

Section: Chapter Questions

Problem 9CQ

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