IDNLearn.com: Your one-stop destination for finding reliable answers. Get accurate and comprehensive answers to your questions from our community of knowledgeable professionals.

Suppose that you are considering the purchase of a bond that matures in 12 years.
The bond has a par value of $1,000, it pays a coupon of 10 percent (annually), and the
coupon is paid semiannually (10s).
A. Calculate the market value (price) of the bond today if the bond’s market rate
(yield) is 7%.
B. Calculate the market value (price) of the bond in five years if the bond’s market
rate is 4%
C. Calculate the Net Present Value and the yield on this bond investment if the
current market rate on this bond is 7%, you expect the market rate to be 4% in 5
years, you plan to sell the bond in five years, and your required rate of return on
this investment is 8% (4% semiannually). Is this an acceptable investment? (hint:
use the purchase price in part A, and the sell price in part B)


Sagot :

We appreciate your contributions to this forum. Don't forget to check back for the latest answers. Keep asking, answering, and sharing useful information. Thank you for trusting IDNLearn.com with your questions. Visit us again for clear, concise, and accurate answers.