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For example, assume Sophia wants to earn a return of 14.00% and is offered the opportunity to purchase a $1,000 par value bond that pays
For example, assume Sophia wants to earn a return of 14.00% and is offered the opportunity to purchase a $1,000 par value bond that pays a 16.00% coupon rate (distributed semiannually) with three years remaining to maturity. The following formula can be used to compute the bonds intrinsic value:
Intrinsic Value = A(1+C)1+A(1+C)2+A(1+C)3+A(1+C)4+A(1+C)5+A(1+C)6+B(1+C)6
What are the three variable names & variable values?
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