You are a bond analyst working for a hedge fund. A bond you follow has face value 100, has a coupon rate of 5% (paid once a year
) and matures in 5 years. You are trying to find if there is any profitable trading strategy. You’ve done extensive research and have formed your opinions on future economic conditions
1 answer:
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Answer:
7.74%
Explanation:
In this question, we use the Rate formula which is shown in the spreadsheet.
The NPER represents the time period.
Given that,
Present value = $1,180
Assuming figure - Future value or Face value = $1,100
PMT = $105
NPER = 5 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this, the answer would be 7.74%
FW = PW×(1.092)^n = $4,429,045.62
