Question
18) You are analyzing a AAA-rated Corporate bond available for sale in the market today. The bond has a three-year term, a coupon of 6.5%
18) You are analyzing a AAA-rated Corporate bond available for sale in the market today. The bond has a three-year term, a coupon of 6.5% paid annually, and a face value of $1,000. The market's expected return for Corporate AAA bonds is currently 8.0% Which of the following equations represents the market value of this bond?
Multiple Choice
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PV = 1,000/(1.08)1 + 1,000/(1.08)2 + 1,000/(1.08)3
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PV = 65/(1.08)1 + 65/(1.08)2 + 1,065/(1.08)3
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PV = 65/(1.08)1 + 65/(1.08)2 + 65/(1.08)3 + 1000/(1.08)4
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PV = 65/(1.08)1 + 65/(1.08)2 + 1000/(1.08)3
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PV = 65/(1.08) + 65/(1.08) + 1,065/(1.08)
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Principles Of Housing Finance Reform
Authors: Susan M. Wachter, Joseph Tracy
1st Edition
0812248627, 978-0812248623
