PRIN.OF CORPORATE FINANCE >BI<
PRIN.OF CORPORATE FINANCE >BI<
12th Edition
ISBN: 9781260431230
Author: BREALEY
Publisher: MCG CUSTOM
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Chapter 3, Problem 33PS
Summary Introduction

To prove: The duration of a bond makes an equal payment each year in perpetuity.

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Assume that a bond makes 30 equal annual payments of \$1,000$1,000 starting one year from today. (This security is sometimes referred to as an amortizing bond.) If the discount rate is 3.5\%3.5% per annum, what is the current price of the bond?
Define the intrinsic value of a 2-year maturity bond whose face value will be repaid in equal installments.
What is the present value of a 10-year bond that has 4 years left-to-maturity (N), 7% annual required rate (I/Y) and 8% annual payment (PMT)? (Note: assume future value, FV, is $1000).

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PRIN.OF CORPORATE FINANCE >BI<

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