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adoni [48]
3 years ago
6

2. Finding the Maturity You've just found a 10 percent coupon bond on the market that sells for par

Business
1 answer:
kirill [66]3 years ago
6 0

Answer and Explanation:

The computation of the maturity of the bond is as follows;

When the bond sales at par that means the future value is equivalent to the present value. Also the par value is considered as a future value and we assume the par value be $1,000. Also the coupon rate and the market rate is the same i.e. 10%

Now

Present value = $1,000

Future value = $1,000

PMT = 10% of $1,000 = $100

RATE = 10%

The formula is shown below:

= NPER(RATE;PMT;-PV;FV;TYPE)

The present value comes in negative

After applying the above formula, the maturity would be

As it shows #VALUE so it is not able to find therefore the maturity would be equal to the par value i.e. $1,000

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