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Sam is thinking about buying a bond for investment purposes. The one he is looking at has a face value of $1,000, a coupon rate
Sam is thinking about buying a bond for investment purposes. The one he is looking at has a face value of $1,000, a coupon rate of 6.5%, pays interest annually, and has 8 years to maturity. Sam knows he can get 9% on investments similar to this one elsewhere in the marketplace. Compute the following
Present Value of the Face _______
Present Value of the Coupon Stream______
Total Value______
If this bond is showing in the WSJ at 92, what is being charged for the bond? ______
Should Sam buy or not buy? ________
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To compute the present value of the face value coupon stream and total value we can use the formula ...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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