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ONCF has issued a 4% bond maturing in 5 years. The bond pays semi-annual coupon. If the required rate of return is 2.5%, compute the
ONCF has issued a 4% bond maturing in 5 years.
The bond pays semi-annual coupon.
- If the required rate of return is 2.5%, compute the PV of the bonds.
- What will happen to the price of the bond:
- Interest rate increases to 4%?
- Interest rate decreases to 1.5%?
Explain in details all your answers.
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Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
12th Edition
978-0030243998, 30243998, 324422695, 978-0324422696
