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Yuki888 [10]
3 years ago
10

A semiannual coupon bond with face value of $1,000 has a coupon rate of 6% and matures in 16 years. The market-determined discou

nt rate on this bond is 14%. What is the price of the bond?
Business
1 answer:
olya-2409 [2.1K]3 years ago
7 0

Answer:

$1,125.30

Explanation:

The Price of the Bond is its Current/Trading price also known as the Present Value (PV). This is determined as follows :

Fv = $1,000

Pmt = $1,000 ×  6% = $160

P/yr = 1

n = 16

i = 14%

PV = ?

Using the Financial calculator to enter the values as above, the Pv is $1,125.30.

Thus, the price of the bond is $1,125.30.

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