Concept explainers
Question content area top
Part 1
Bond
valuation—Semiannual
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 |
Question content area bottom
Part 1
The
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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