Exactly 1 year ago we invested $6,757 in a 4 year bond with a coupon rate...
Exactly 1 year ago we invested $6,757 in a 4 year bond with a coupon rate of 5.25% and annual coupon payments. Since then interest rates have dropped and currently 3 year bonds have a coupon rate of 2.44%. What is the present value of the bond I purchased 1 year ago?
Homework Answers
Present value of the bond is given as=6757*5.25%/2.44%*(1-1/1.0244^3)+6757/1.0244^3=7299.91
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Exactly 1 year ago we invested $6,757 in a 4 year bond with a
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