A 20-year government coupon bond has a face value of $1,000 and a coupon rate of 6% paid annually at the end of each year. Assume that the market interest rate is 8% per year. What is the bond’s PV? (You can sum the PVs for each of the coupon payments and the final $1,000, or you can use the annuity formula in the text, at p. 103, to calculate the PV of the coupon payments and save some work. If you use the annuity formula, be sure to add the PV of the final $1,000 payment to the annuity result.) Round your answer to the nearest dollar (XXX).

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
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A 20-year government coupon bond has a face value of $1,000 and a coupon rate of 6% paid annually at the end of each year. Assume that the market interest rate is 8% per year.

What is the bond’s PV?

(You can sum the PVs for each of the coupon payments and the final $1,000, or you can use the annuity formula in the text, at p. 103, to calculate the PV of the coupon payments and save some work. If you use the annuity formula, be sure to add the PV of the final $1,000 payment to the annuity result.)

Round your answer to the nearest dollar (XXX).

Note:-

Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
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