Consider a bond with the following terms: • 10-years to maturity • $1,000 face value • Coupon are paid 2 times per year • Annual coupon rate is 5%   For problems, 1- 3 assume a constant discount rate across maturities of 6%. Also, assume that the bond will make its next coupon payment in exactly 1/2 year.     1. Find the current price of the bond

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
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Consider a bond with the following terms:

• 10-years to maturity

• $1,000 face value

• Coupon are paid 2 times per year

• Annual coupon rate is 5%

 

For problems, 1- 3 assume a constant discount rate across maturities of 6%. Also, assume that the bond will

make its next coupon payment in exactly 1/2 year.

 

 

1. Find the current price of the bond

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