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(1) What is the value of a 10 -year, $1,000 par value bond with a 10% annual coupon if its required return is 10% ?
(1) What is the value of a 10 -year, $1,000 par value bond with a 10% annual coupon if its required return is 10% ? What is the value of a 13% coupon bond that is otherwise identical to the bond described above? Would we now have a discount or a premium bond? (2) What is the value of a 7\% coupon bond with these characteristics? Would we now have a discount or a premium bond? (3) What would happen to the values of the 7%,10%, and 13% coupon bonds over time if the required return remained at 10% ? (Hint: With a financial calculator, enter PMT, I/YR, FV, and N, and then enter different values of N to see what happens to the PV as it approaches maturity.)
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