In this case, the bond's coupon rate (10%) is less than the current market interest rate ( 11%), so this bond is a discount bond. Suppose a bond has a par value of $1,000. If the bond's coupon rate is 5% and the current market interest rate is 10%, the bond's current market price is its par value, so this bond is called a bond. Using a financial calculator, compute the present value of the cash flows this asset is expected to produce. Enter this value into the final row of the following table. Note: Make sure your calculator is set to END mode. The absolute value of the present value your calculator computed is the market price of the bond. Because the market price is the par value, your friend purchased a bond. Suppose a friend of yours invested in an outstanding bond with Luminous Lighting. The bond has an annual coupon rate of 8%, a remaining maturity of 16 years, and a $1,000 par value. The market interest rate is currently 12%. In order to use a financial calculator to compute how much your friend paid for the bond, you will need to know the following information: Compute the amount of interest paid each year by completing the following math derivation. Select this same value from menu found in the following financial calculator table. Amount of Interest = Coupon Rate Par Value =8%$1,000= risk is the risk of a decline in a bond's value due to an increase in interest rates. This risk is higher on bonds that have long maturities than investor's , which is the period of time an investor plans to hold a particular investment. Longer maturity bonds have high risk but low risk, while higher coupon bonds have a higher level of risk and a lower level of risk. To account for the effects related to both a bond's maturity and coupon, many analysts focus on a measure called of , which is the weighted average of the time it takes to receive each of the bond's cash flows. Conceptual Question: Which of the following bonds would have the largest duration