Q2. Fast and loose company has outstanding an 8%, four years, $1000-par value bond on which interest is paid annually. a) If the market required rate of return is 15%, what is the market value of the bond? b) What would be its market value if the market required return dropped to 12% to 8%? (10)

Q2. Fast and loose company has outstanding an 8%, four years, $1000-par value bond on which interest is paid annually. a) If the market required rate of return is 15%, what is the market value of the bond? b) What would be its market value if the market required return dropped to 12% to 8%? (10)

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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Question

Q2. Fast and loose company has outstanding an 8%, four years, $1000-par
value bond on which interest is paid annually.
a) If the market required rate of return is 15%, what is the market value of
the bond?
b) What would be its market value if the market required return dropped to
12% to 8%?
(10)

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