The bond paid $150 per year in coupon interest on the last day of each year (the last payment made today). You intend to hold the bond for three more years and project that 3 for $860. You also project that the bond will continue paying $150 in interest per year. Given the risk associated with the bond, its required rate of return (r Dover the next three years is 9.50 percent. Accordingly, the bond's fair present value is you will be able to sell it at the end of 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
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The bond paid $150 per year in coupon interest on the
last day of each year (the last payment made today).
You intend to hold the bond for three more years and
project that
3 for $860. You also project that the bond will continue
paying $150 in interest per year. Given the risk
associated with the bond, its required rate of return (r
) over the next three years is 9.50 percent. Accordingly,
the bond's fair present value is
you
will be able to sell it at the end of year
Transcribed Image Text:The bond paid $150 per year in coupon interest on the last day of each year (the last payment made today). You intend to hold the bond for three more years and project that 3 for $860. You also project that the bond will continue paying $150 in interest per year. Given the risk associated with the bond, its required rate of return (r ) over the next three years is 9.50 percent. Accordingly, the bond's fair present value is you will be able to sell it at the end of year
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