Suppose you are considering the purchase of a coupon bond, Ask an Expert

Economics

Suppose you are considering the purchase of a coupon bond that has the following future payments: $500 in one year, $500 in two years, $500 + $10,000 in three years.

a) What is the bond worth today if the market interest rate is 8%?

b) Suppose that you have just purchased the bond and suddenly the market interest rate falls to 5%. What is the bond worth now?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M92201608

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