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Suppose US Treasury issues a perpetual bond paying a coupon of $400 (paid annually). If your required rate of return is 3% per annum, then
Suppose US Treasury issues a perpetual bond paying a coupon of $400 (paid annually). If your required rate of return is 3% per annum, then how much you will be willing to pay for the bond |
Annual coupon rate:
Required rate:
PV Perpetual Bond:
An annuity pays $2,000 every year for a total of 6 payments. The first payment will arrive at the end of 9th year. The interest rate is 12% per annum. Find the Present Value of the annuity (at T=0) Fill in the cells highlighted in Yellow. |
PV:
Time of which PV was calculated:
PV at t=0
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