Lightning Electric’s outstanding bond has a $1000 maturity value and a 4.5 percent coupon rate of interest (paid semiannually). The bond, which was issued five years ago, mature in 10 years. If investors require a return equal to 6 percent to invest in similar bonds, what is the current market value of Lightning’s bond?

Lightning Electric’s outstanding bond has a $1000 maturity value and a 4.5 percent coupon rate of interest (paid semiannually). The bond, which was issued five years ago, mature in 10 years. If investors require a return equal to 6 percent to invest in similar bonds, what is the current market value of Lightning’s bond?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 4P

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