Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Part 1

Bond

valuationSemiannual

interest   Calculate the value of each of the bonds shown in the following​ table, all of which pay interest semiannually.  ​(Click on the icon here

  

in order to copy the contents of the data table below into a​ spreadsheet.)

Bond

Par Value

Coupon

interest rate

Years to

maturity

Required stated

annual return

A

​$1,000

 

9

​%

8

 

9

​%

B

1,000

 

13

 

15

 

12

 

C

100

 

15

 

6

 

16

 

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Part 1

The value of bond A is $______ (Round to the nearest​ cent.)

 

Expert Solution
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Step 1 Explanation

The value of a bond can be calculated as the present value of the bonds coupon payments and its face value. The stated return is the discount rate used to bring down the bond's cash flows to its present value.

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