Question
Assume a 10-yearTreasury bond has a coupon rate of 5.6%. a.Give examples of required rates of return that would make the bond sell at a
Assume a 10-yearTreasury bond has a coupon rate of 5.6%.
a.Give examples of required rates of return that would make the bond sell at a discount, at a premium, and at par.
b.If this bond's par value is $5000,calculate the differing values for this bond given the required rates you choose in part a.
a.At what rate would the bond sell at a discount?(Select the best answer below.) A.4.6%B.5.6%C.7.5%
At what rate would the bond sell at a premium?(Select the best answer below.)A.4.6%B.5.6%C.7.5%
At what rate would the bond sell at par?(Select the best answer below.)A.4.6%B.5.6%C.7.5%
b. If this bond's par value is $5 000 and the required rate is 7.5%, the present value of the bond is $.(Round to the nearest cent.)
If this bond's par value is $5000 and the required rate is 4.6%, the present value of the bond is $.(Round to the nearest cent.)
If this bond's par value is $5000 and the required rate is 5.6%, the present value of the bond is $.(Round to the nearest cent.)
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