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n200080 [17]
3 years ago
13

A 15-year, $1,000 par value zero-coupon rate bond is to be issued to yield 9 percent. Use Appendix B for an approximate answer b

ut calculate your final answer using the formula and financial calculator methods. a. What should be the initial price of the bond
Business
1 answer:
REY [17]3 years ago
7 0

Answer:

$274.54

Explanation:

Given:

n = 15 years

Future Value, FV = 1000

rate, r = 9%

Required:

Find the initial price of the bond

Given that we have a zero coupon bond here, it means the par value is paid at date of maturity, and no issuer pays no regular coupon payment.

To find the initial price of the bond, use the formula:

\frac{FV}{(1+r)^n}

Substitute figures:

\frac{1000}{(1+0.09)^1^5}

= \frac{1000}{(1.09)^1^5}

= \frac{1000}{3.642}

= 274.57

The initial price of the bond should be $274.54

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Answer:

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4 0
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One of your fellow investment adviser representatives (iar) at your firm recently came to you and asked for a loan. you couldn't
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4 years ago
Why might a stock at any point in time not be in equilibrium?
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