A bond's current market value is equal to the present value of the coupon payments plus the present value of the face amount.a.

Question

ruslelena [56]

4 years ago

12

A bond's current market value is equal to the present value of the coupon payments plus the present value of the face amount.a.

Trueb. False

Business

1 answer:

blondinia [14] · Answer 1 · 2021-11-22T19:56:47+03:00

Answer:

The present value of a bond equals present value of annual coupon and present value of the face value of the bond. The correct answer is A.

Explanation:

In this case, we will obtain the present value of annual coupon by discounting the coupon at the present value of annuity factor for the bond duration. We will also obtain the present value of the face value of the bond by discounting the face value at the present value factor for the bond maturity.