Suppose you recently paid $1000 for a new 30-year bond issued by AT&T. The interest ("coupon") rate is 6 percent, and for the sake of simplicity, let's assume that the $60 is paid once a year at the end of the year. Given the 6 percent interest rate, the present value of the bond's face value of $1000 paid thirty years from now is approximately $312. What is the present value of the stream of thirty, annual $60 payments? $350 O $1,000 $688 O $312 $805
Suppose you recently paid $1000 for a new 30-year bond issued by AT&T. The interest ("coupon") rate is 6 percent, and for the sake of simplicity, let's assume that the $60 is paid once a year at the end of the year. Given the 6 percent interest rate, the present value of the bond's face value of $1000 paid thirty years from now is approximately $312. What is the present value of the stream of thirty, annual $60 payments? $350 O $1,000 $688 O $312 $805
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 9P
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![Suppose you recently paid $1000 for a new 30-year bond issued by AT&T. The interest ("coupon")
rate is 6 percent, and for the sake of simplicity, let's assume that the $60 is paid once a year at the
end of the year. Given the 6 percent interest rate, the present value of the bond's face value of
$1000 paid thirty years from now is approximately $312. What is the present value of the stream of
thirty, annual $60 payments?
$350
$1,000
$688
$312
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4b2a219b-8fc3-46cd-bb39-b85b9be4d48a%2F3afb90c8-0de7-44c9-876f-58bc38b52abf%2Fjko1b75_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose you recently paid $1000 for a new 30-year bond issued by AT&T. The interest ("coupon")
rate is 6 percent, and for the sake of simplicity, let's assume that the $60 is paid once a year at the
end of the year. Given the 6 percent interest rate, the present value of the bond's face value of
$1000 paid thirty years from now is approximately $312. What is the present value of the stream of
thirty, annual $60 payments?
$350
$1,000
$688
$312
$
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