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A 20 year bond with a face value of $1,000 has an 8% coupon rate compounded quarterly. If the bond was purchased for $1,107
A 20 year bond with a face value of $1,000 has an 8% coupon rate compounded quarterly. If the bond was purchased for $1,107 and held to maturity, what is the IRR of the bond? Number of periods = 4 quarters* 20 years = Interest Payment per quarter = $1000*(.08)/4 = . = 20*(P/A, i, 80) + 1,000(P/F, i, 80) From Appendix C Using 1.75% for i, 20*(..... ..) + 1,000( i = 1.75% (quarterly rate) IRR = (1+.0175)^4 - 1 =.....
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Introduction To Derivatives And Risk Management
Authors: Don M. Chance, Robert Brooks
10th Edition
130510496X, 978-1305104969
