2. One of General Electric's bond issues has an annual coupon rate of 3.6%, a face value of $1,000 and a required return of 5%. (a) What is the value of the bond if the bond matures in 30 years? (b) What is the value of the same bond 20 years later, when it has 10 years to maturity left, if interest rates haven't changed?
2. One of General Electric's bond issues has an annual coupon rate of 3.6%, a face value of $1,000 and a required return of 5%. (a) What is the value of the bond if the bond matures in 30 years? (b) What is the value of the same bond 20 years later, when it has 10 years to maturity left, if interest rates haven't changed?
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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USE FORMULA APPROACH OR CALCULATOR APPROACH ONLY (NO EXCEL)
(a) What is the
(b) What is the value of the same bond 20 years later, when it has 10 years to maturity left, if interest rates have not changed?
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