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

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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