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Exam (elaborations)

A $1000 par value bond pays a coupon rate of 8.2 percent. The bon

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A $1000 par value bond pays a coupon rate of 8.2 percent. The bond makes semiannual payments, and it matures in four years. If investors require a 10 percent return on this investment, what is the bond's price? Solution Semi Cashflow PV factor Present Annual at 8.2% at 10% Value 1 41 $     0. $    39.05 2 41 $     0. $    37.19 3 41 $     0. $    35.42 4 41 $     0. $    33.73 5 41 $     0. $    32.12 6 41 $     0. $    30.59 7 41 $     0. $    29.14 8 1041 $     0. $ 704.59 Total $ 941.83 at maturity bond will return face value along with last interest of $41 Answer: $941.83

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HBO Small Business En Ondernemerschap
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HBO Small Business en Ondernemerschap

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A $1000 par value bond pays a coupon rate of 8.2 percent. The bond makes semiannual
payments, and it matures in four years. If investors require a 10 percent return on this
investment, what is the bond\'s price?


Solution
Semi Cashflow PV factor Present Annual at 8.2% at 10% Value 1 41 $ 0.952381 $
39.05 2 41 $ 0.907029 $ 37.19 3 41 $ 0.863838 $ 35.42 4 41 $ 0.822702 $
33.73 5 41 $ 0.783526 $ 32.12 6 41 $ 0.746215 $ 30.59 7 41 $ 0.710681 $
29.14 8 1041 $ 0.676839 $ 704.59 Total $ 941.83 at maturity bond will return face
value along with last interest of $41 Answer: $941.83
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Uploaded on
June 26, 2023
Number of pages
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Written in
2022/2023
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Exam (elaborations)
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Subjects

  • 1000 par
  • par value
  • value bond
  • bond pays
  • pays coupon
  • coupon rate
  • percent bon
  • rate 82
  • 82 percent
$8.39
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