Question
As an MBA student studying Finance, you're armed with a deep understanding that the price of a bond is the PV of all expected coupon
As an MBA student studying Finance, you're armed with a deep understanding that the price of a bond is the PV of all expected coupon payments and the PV of the maturity value. You can calculate the price using ONLY the PV function in Excel. Calculate the value of a 15-year green bond, with a coupon rate of 5%, assuming current interest rates on similar bonds are 3%? How much would the value change if interest rates increased to 6%? (Recall that the compounding interval for bonds is 6 months.) Under what conditions will this bond trade at par (face value)?
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