Ma1. Please give only typed answer. You are considering buying a municipal bond with a 10-year life, a 1,000 par value, and will pay a coupon of 4% annually. You have an opportunity to buy the bonds at original issue (e.g., full 10-year life). Assuming you require a 8% rate of return, how much should you pay for the bond (i.e., how much is it worth)?
Ma1. Please give only typed answer. You are considering buying a municipal bond with a 10-year life, a 1,000 par value, and will pay a coupon of 4% annually. You have an opportunity to buy the bonds at original issue (e.g., full 10-year life). Assuming you require a 8% rate of return, how much should you pay for the bond (i.e., how much is it worth)?
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
Problem 1PS
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Ma1.
Please give only typed answer.
You are considering buying a municipal bond with a 10-year life, a 1,000 par value, and will
pay a coupon of 4% annually. You have an opportunity to buy the bonds at original issue (e.g.,
full 10-year life). Assuming you require a 8%
bond (i.e., how much is it worth)?
Transcribed Image Text:You are considering buying a municipal bond with a 10-year life, a 1,000 par value, and will
pay a coupon of 4% annually. You have an opportunity to buy the bonds at original issue (e.g.,
full 10-year life). Assuming you require a 8% rate of return, how much should you pay for the
bond (i.e., how much is it worth)?
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