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Wewaii [24]
3 years ago
12

Consider a $1000 bond that pays an annual interest rate of 8% and matures in two years. The prevailing interest rate has dropped

to 4%. Choose from the numbers to create the equation that will calculate the current price of this bond. Note that this bond will make two payments. Please place the earlier one on the left side of the plus sign.
Business
1 answer:
Anika [276]3 years ago
7 0

Answer:

Current bond price = 80 / (1+0.04)^1 + 1080 / (1+0.04)^2

Explanation:

The Coupon payment = 0.08 * 1000 = 80

The Payment at EOY 1 = 80

The Payment at EOY 2 = 80 + 1000 = 1080

market interest rate = 4%

Current bond price = 80 / (1+0.04)^1 + 1080 / (1+0.04)^2

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Answer:

consumption, investment, government purchases, and net exports.

Explanation:

The Gross Domestic Products (GDP) is the measure of the total market value of all finished goods and services made within a country during a specific period.

Simply stated, GDP is a measure of the total income of all individuals in an economy and the total expenses incurred on the economy's output of goods and services in a particular country. The Gross Domestic Products (GDP) of a country's economy gives an insight to it's social well-being.

Basically, the four major expenditure categories of GDP are consumption, investment, government purchases, and net exports.

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Answer:

PV= $81,947.83

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Giving the following information:

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PV= 95,000/(1.03^5)

PV= $81,947.83

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