You have purchased a 14 year $1000 per value bond. The annual coupon rate on the bond is 9.7% paid each 6 month. If you expected to earn the market rate of 12.8% as the return on this bond. How much did you pay for it a. 800.45 b. 830.5 c. 537. 43 d. 802. 67

You have purchased a 14 year $1000 per value bond. The annual coupon rate on the bond is 9.7% paid each 6 month. If you expected to earn the market rate of 12.8% as the return on this bond. How much did you pay for it a. 800.45 b. 830.5 c. 537. 43 d. 802. 67

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

a. 800.45

b. 830.5

c. 537. 43

d. 802. 67

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

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