Answered

Get personalized answers to your specific questions with IDNLearn.com. Our platform is designed to provide trustworthy and thorough answers to any questions you may have.

Within Year, Inc. has bonds outstanding with a $1,000 par value and a maturity of 39 years. The bonds have an annual coupon rate of 8.0% with semi-annual coupon payments. You would expect a quoted annual return of 9.0% if you purchased these bonds. What are the bonds worth to you

Sagot :

Tundexiidn

Answer:

$892.48

Explanation:

Time = 39 years*2 = 78 periods

Coupon rate = 8%/2 = 4%

Coupon payment = 0.04*1,000 = $40

Annual return = 9%/2 = 4.5%

FV= 1,000, PMT= 40, N= 78, I/Y= 4.5

Worth of bond = PV(Fv, Pmt, N, I/Y)

Worth of bond = PV(1000, 40, 78, 4.5%)

Worth of bond = $892.48

Thank you for being part of this discussion. Keep exploring, asking questions, and sharing your insights with the community. Together, we can find the best solutions. Your questions are important to us at IDNLearn.com. Thanks for stopping by, and come back for more reliable solutions.