Investments in the marketplace currently yield 5%. Therefore, a GM 4% coupon bond, maturing in 3 years, will be priced at?
I know the correct answer is $973 but I don't understand why
Interest = $1,000 * 0.04 = $40
Current bond price = $40(PVIFA 5%,3) + $1,000(PVIF 5%,3)
Current bond price = ($40 * 2.72325) + ($1,000 * 0.86384)
Current bond price = $973
Investments in the marketplace currently yield 5%. Therefore, a GM 4% coupon bond, maturing in 3...
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