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The face value is $1,000. When the bond is first issued, the price (P) is set to be equal to the face value, i.e. $1,000.
The face value is $1,000. When the bond is first issued, the price (P) is set to be equal to the face value, i.e. $1,000.
If banks are offering a 4% interest rate for deposits, and the bond issuer wants to offer a competitive interest rate by setting i = 0.04, what should be the value for C that is paid to bond holder annually?
The following formula is useful to understand a three-year coupon bond. CCC $1000 (1 + i) * (1+i)2 *(1+i)3 * (1 + i)3 The face value is $1,000. When the bond is first issued, the price (P) is set to be equal to the face value, i.e. $1,000. If banks are offering a 4% interest rate for deposits, and the bond issuer wants to offer a competitive interest rate by setting i = 0.04, what should be the value for C that is paid to bond holder annually? Answer: $ (Input an integer, no decimal places.)Step by Step Solution
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