Svanur ehf. issued an extraordinary bond five years ago. This bond was for 8 years. The bond was 10 million. ISK at nominal value and it bears 6% interest. The first 4 years are only interest payments from the bond. After that, annual installments of the letter are paid ie. ISK 2.5 million per year, for four years, plus annual interest payments. Now 5 years have passed. There are three payments left on the bond. What are the bonds worth now if the required yield is 4.0 % ?

Svanur ehf. issued an extraordinary bond five years ago. This bond was for 8 years. The bond was 10 million. ISK at nominal value and it bears 6% interest. The first 4 years are only interest payments from the bond. After that, annual installments of the letter are paid ie. ISK 2.5 million per year, for four years, plus annual interest payments. Now 5 years have passed. There are three payments left on the bond. What are the bonds worth now if the required yield is 4.0 % ?

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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