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solve and draw cash flow diagram(s) where possible. An investor purchases a coupon bond with a face value of $10,000, for exactly $8,000. The bond
solve and draw cash flow diagram(s) where possible. An investor purchases a coupon bond with a face value of $10,000, for exactly $8,000. The bond promises to pay the holder 8% interest compounded quarterly (2% paid every 3 months), and the bond has a maturity of 15 years. This investor holds the bond for 5 years, and interest rates on most bonds for sale at that time have changed to 12% interest compounded quarterly. a) What is the present worth of the bond? (10 pts) b) If the investor decides to sell their bond after 5 years, what fair dollar amount would they receive? (20 pts)
solve and draw cash flow diagram(s) where possible.
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