Question
18. Bond valuation . If a $1,000 zero coupon bond with a 10year maturity has a market price of $385.50, what is its rate of
18.Bond valuation. If a $1,000 zero coupon bond with a 10year maturity has a market price of $385.50, what is its rate of return?
19.Bond valuation. A taxexempt bond was recently issued at an annual 6 percent coupon rate and matures 15 years from today. The par value of the bond is $1,000.
- If required market rates are 6 percent, what is the market price of the bond?
- If required market rates fall to 3 percent and maturity is 15 years, what is the market price of the bond?
- If required market rates rise to 9 percent and maturity is 15 years, what is the market price of the bond?
- At what required market rate (6 percent, 3 percent, or 9 percent) does the above bond sell at a discount? At a premium?
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18 Bond Valuation For a zerocoupon bond the formula to calculate the rate of return is Rate of retur...
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
