Question
You are considering buying a municipal bond with a 10-year life, a 1,000 par value, and will pay a coupon of 4% annually. You have
You are considering buying a municipal bond with a 10-year life, a 1,000 par value, and will pay a coupon of 4% annually. You have an opportunity to buy the bonds at original issue (e.g., full 10-year life). Assuming you require a 8% rate of return, how much should you pay for the bond (i.e., how much is it worth)?
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Microeconomics
Authors: Paul Krugman, Robin Wells
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