PRINCIPLE OF FINANCE PRINCIPLE OF FINANCE PRINCIPLE OF FINANCE PRINCIPLE OF FINANCE PRINCIPLE OF FINANCE PRINCIPLE OF FINANCE PRINCIPLE OF FINANCE PRINCIPLE OF FINANCE PRINCIPLE OF FINANCE VPRINCIPLE OF FINANCE VPRINCIPLE OF FINANCE PRINCIPLE OF FINANCE

QUESTION

- IF the CR is the same as r, what are the current value for the bond.

- IF the CR is 5 %, and r remain the same , what are the current value for the bond.

- IF the CR is 3 %, and r remain the same , what are the current value for the bond.

Consider a U.S. government bond with as 6 3/8% coupon that expires on December, 1 2013. The Par Value of the bond is $1,000. Coupon payments are made semiannually (June 30 and December 31 for this particular bond). Since the coupon rate is 6 3/8%, the payment is $31.875. On January 1, 2009 the size and timing of cash flows are: On January 1, 2009, the required yield is 5%. The current value is