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What is the value of a bond that matures in 8 years, has an annual coupon...


What is the value of a bond that matures in 8 years, has an annual coupon payment of $90, and has a par value of $1000? Assume a required rate of return of 10%, and round your answer to the nearest $10. O $1,200 $950 O $900 O $1,150
What is the value of a bond that matures in 8 years, has an annual coupon payment of $90, and has a par value of $1000? Assume a required rate of return of 10%, and round your answer to the nearest $10. O $1,200 $950 O $900 O $1,150
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Value of bond=Annual coupon*Present value of annuity factor(10%,8)+$1000*Present value of discounting factor(10%,8)

=$90*5.334926198+$1000*0.46650738

=$950(Approx).

NOTE:

1.Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

=$90[1-(1.1)^-8]/0.1

=$90*5.334926198

2.Present value of discounting factor=$1000/1.1^8

=$1000*0.46650738

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