Question
Consider a five-year, 15 percent annual coupon bond with a face value of $1,000.The bond trades at a rate of 12 percent. a. What is
Consider a five-year, 15 percent annual coupon bond with a face value of $1,000. The bond trades at a rate of 12 percent.
| a. | What is the price of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places. (eg, 32.16)) |
| bond price | ps |
| b. | If the interest rate increases 1 percent, what will the bond be? |
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
a To calculate the price of the bond we need to calculate the present value of its cash flows The ...
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Step: 2
Step: 3
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Financial Accounting an introduction to concepts, methods and uses
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
13th Edition
978-0538776080, 324651147, 538776080, 9780324651140, 978-0324789003
