A 30 year bond has a face value of $1,000 and a coupon rate of 6% per year with quarterly interest payments. Exactly when there are 5 years to maturity (and 20 interest payments left), the market rate for bonds with the same investment grade and maturity are sold at a market rate of 8% per year. How much is the price of one share of the subject bond under current market condition?
A 30 year bond has a face value of $1,000 and a coupon rate of 6% per year with quarterly interest payments. Exactly when there are 5 years to maturity (and 20 interest payments left), the market rate for bonds with the same investment grade and maturity are sold at a market rate of 8% per year. How much is the price of one share of the subject bond under current market condition?
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
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Transcribed Image Text:A 30 year bond has a face value of $1,000 and a coupon rate of 6% per year with quarterly interest
payments. Exactly when there are 5 years to maturity (and 20 interest payments left), the market
rate for bonds with the same investment grade and maturity are sold at a market rate of 8% per
year. How much is the price of one share of the subject bond under current market condition?
1,138
874
1,086
918
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