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1.  What is the value of a 15-year 10% $1,000 coupon bond when the market interest rate is 15%? $421 $708 $1,000 $1,519   2.  What is the value of a 12-year 10% $1,000 bond when the market interest rate is 5%? $1,000 $1,050 $1,443 $2,200

1.  What is the value of a 15-year 10% $1,000 coupon bond when the market interest rate is 15%? $421 $708 $1,000 $1,519   2.  What is the value of a 12-year 10% $1,000 bond when the market interest rate is 5%? $1,000 $1,050 $1,443 $2,200

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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1.  Exploring Finance: Coupon Bonds.

This graph shows the value of 10% coupon bonds of different terms across differing market interest rates. Each bond pays INT = $100 at the end of each year and returns M = $1,000 at maturity. For comparison, the blue line depicts the value of a one-year bond. The term of the other bond in years may be changed using the slider. Drag on the graph to change the current market interest rate (rd) at which the bond (orange curve) is evaluated.

 

1.  What is the value of a 15-year 10% $1,000 coupon bond when the market interest rate is 15%?

  1. $421
  2. $708
  3. $1,000
  4. $1,519

 

2.  What is the value of a 12-year 10% $1,000 bond when the market interest rate is 5%?

  1. $1,000
  2. $1,050
  3. $1,443
  4. $2,200

 

here is the reference,

2-1 2-1 (1-0.1007+ (1+0.100) = 1,000 ΣΥΓ: INT + 15-Year Bond Market Interest Rate (%) 20 Bond Value (5) 2.000 1.000.000 500- 1-Year Bond 10 10 Yrs 15 15
Transcribed Image Text:2-1 2-1 (1-0.1007+ (1+0.100) = 1,000 ΣΥΓ: INT + 15-Year Bond Market Interest Rate (%) 20 Bond Value (5) 2.000 1.000.000 500- 1-Year Bond 10 10 Yrs 15 15
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