Problem 8 Coupon Bond. Coupon bond is a popular financial instrument. Here is the deal: A coupon bonds of face value F and maturity date N years from now with payment P per year will pay you P Baht per years for N years. Then at last payment you will also get F Baht. For example, if you buy today a coupon bond of face value F = 10 Million Baht with maturity date N = 3 years from now with payment of P = 10,000 Baht. You will get 10K one year from now, then two years from now, then three years after you bought it. Then, at the end of the third year, along with the last 10K payment, you will also get 10Million Baht. The question is if the (yearly) interest rate is r how much should you pay for a coupon bonds of face value F with maturity date N years from now with payment of P baht per year?
Problem 8 Coupon Bond. Coupon bond is a popular financial instrument. Here is the deal: A coupon bonds of face value F and maturity date N years from now with payment P per year will pay you P Baht per years for N years. Then at last payment you will also get F Baht. For example, if you buy today a coupon bond of face value F = 10 Million Baht with maturity date N = 3 years from now with payment of P = 10,000 Baht. You will get 10K one year from now, then two years from now, then three years after you bought it. Then, at the end of the third year, along with the last 10K payment, you will also get 10Million Baht. The question is if the (yearly) interest rate is r how much should you pay for a coupon bonds of face value F with maturity date N years from now with payment of P baht per year?
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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Transcribed Image Text:Problem 8 Coupon Bond. Coupon bond is a popular financial instrument. Here is the deal:
A coupon bonds of face value F and maturity date N years from now with payment
P per year will pay you P Baht per years for N years. Then at last payment you
will also get F Baht.
10Million Baht
For example, if you buy today a coupon bond of face value F
with maturity date N = 3 years from now with payment of P = 10,000 Baht. You
will get 10K one year from now, then two years from now, then three years after
you bought it. Then, at the end of the third year, along with the last 10K payment,
you will also get 10Million Baht.
=
The question is if the (yearly) interest rate is r how much should you pay for a
coupon bonds of face value F with maturity date N years from now with payment
of P baht per year?
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