in a printing job, the cost of producing a thousand brochures was GH3500.The publisher decided to sell these brochures at 125% g
1 answer:
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Answer:
Ans. The price of the bond immediately after it makes its first coupon payment is $1,068.02
Explanation:
Hi, we have to bring to present value the remaining cash flows, that is 9 coupons and its face value, so we need to use the following equation.
Where:
Coupon = 0.07*$1,000=$70
YTM = Yield to maturity, in our case 6% or 0.06
n = 9 (since the bond is paying every year and there are 9 years left until maturity)
Face Value= $1,000.
Everything should look like this
Therefore:
So, the price of this bond right after paying its first coupon is $1,068.02
Best of luck.