A five-year $10,000 bond with a 10% coupon rate costs $10,000 and pays its holder $500 every six months for five years, with a final additional payment of $10,000 made at the end of those ten payments Find its present value if the interest rate is: (a) 6%; (b) 10%; (c) 12%. the entire amount of $16.000 now or you can pay $10,000 now

A five-year $10,000 bond with a 10% coupon rate costs $10,000 and pays its holder $500 every six months for five years, with a final additional payment of $10,000 made at the end of those ten payments Find its present value if the interest rate is: (a) 6%; (b) 10%; (c) 12%. the entire amount of $16.000 now or you can pay $10,000 now

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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If you want to receive $500 every three months for 10 years by investing in a bond that has a face value of $10,000 and a yield interest rate of 8% annually, what would be the value of this bond?
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A bond with a face value of $5,000 pays quarterly interest of 4 percent each period. Twenty interest payments remain before the bond matures. How much would you be willing to pay for this bond today if the next interest payment is due now and you want to earn 8 percent compounded quarterly on your money?
A five year $10, 000 bond with a 10% coupon rate costs $ 10,000 and pays its holder $500 every six months for five years, with a final additional payment of $10, 000 made at the end of those ten payments Find its present value if the interest rate is: (a) 6% (b) 10% (c) 12%
A bond with a face value of $5,000 pays quarterly interest of 1.5 percent each period. Twenty-two interest payments remain before the bond matures. How much would you be willing to pay for this bond today if the next interest payment is due now and you want to earn 8 percent compounded quarterly on your money? Click the icon to view the table of compound interest factors for discrete compounding periods when i= 2%. You should pay $ (Round to the nearest cent as needed.)

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