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Problem #3 (2 pts): A bond with face value of $5,000 pays quarterly interest of 1% each quarter. Thirty Six (36) interest payments (quarterly) remain
Problem \#3 (2 pts): A bond with face value of $5,000 pays quarterly interest of 1% each quarter. Thirty Six (36) interest payments (quarterly) remain before the bond matures ( 35 quarters from now). How much would you be willing to pay for this bond today if the next interest payment is due now and you want to earn annually 6% but compounded quarterly on your money? Note: Coupon Rate is 1% per quarter. Interest rate is 1.5% per quarter. (interest payments starts with period 0 and finish at t=35 )
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