Suppose John purchased an annual coupon bond with a face value of $1000, a coupon rate of 8% and 10-year maturity. Four years after the purchase, immediately before the fourth coupon payment, he decides to sell the bond. At that time, the interest rate has fallen to 6%. What is the fair value of the bond at that time (within $10)? 1098
Suppose John purchased an annual coupon bond with a face value of $1000, a coupon rate of 8% and 10-year maturity. Four years after the purchase, immediately before the fourth coupon payment, he decides to sell the bond. At that time, the interest rate has fallen to 6%. What is the fair value of the bond at that time (within $10)? 1098
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:Suppose John purchased an annual coupon bond with a face value of $1000, a
coupon rate of 8% and 10-year maturity. Four years after the purchase, immediately
before the fourth coupon payment, he decides to sell the bond. At that time, the
interest rate has fallen to 6%. What is the fair value of the bond at that time (within
$10)?
1098
1118
1138
1158
None of the above
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