Question
ACCOUNTING TUTOR PLEASE HELP ASAP (ANSWER A,B,C) (Bond valuation) You own a bond with a par value of $1000 that pays a $100 annual coupon.
ACCOUNTING TUTOR PLEASE HELP ASAP (ANSWER A,B,C)
(Bond valuation) You own a bond with a par value of $1000 that pays a $100 annual coupon. The bond matures in 15 years. Your required rate of return is 12% p.a.
(a) Calculate the value of the bond.
(b) How does the value of the bond change if your required rate of return (i) increases to 15% p.a., or (ii) decreases to 8% p.a.?
(c) Assume that the bond matures in 5 years instead of 15 years. Recompute your answers in part (b).
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