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Assume the following information for an existing bond that provides annual coupon payments:

Par value = $1,000
Coupon rate = 11%
Maturity = 4 years
Required rate of return by investors = 11%

a. What is the present value of the bond?

b. If the required rate of return by investors were 9 percent, what would be the present value of the bond?

c. What is the present value of the bond if it now becomes a zero coupon bond (does not coupon) and the discount rate were 14 percent instead of 11 percent?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9793094

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