Question
A bond has a $1,000 face value (FV = $1,000) and an 11 percent coupon or legal interest rate and it pays interest annually. The
A bond has a $1,000 face value (FV = $1,000) and an 11 percent
coupon or legal interest rate and it pays interest annually. The bond will mature in 2030 and
the bondholder will receive his/her coupon payment on April 23 of each year (so the bond just
made its most recent payment). The current market rate (r) is 8.25 percent. What is the dollar
value of each annual coupon payment (C, in $) and what are the total number of coupon
payments remaining for this bond until it matures in 2030? Finally, what is the current market
price of this bond today (PV), on April 23, 2021?
Annual Payment C ($) =
Total Number of Coupon Payments Remaining =
Value of Bond (PV) on 4/23/2021 =
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