Homework Answers
A: Price of Bond A= $1000
Using financial calculator
Input: FV= 1000, PMT=12%*1000 = 120, I/Y=12, N=10
Solve for PV as -1000
Price of Bond B= $660.99
Using financial calculator
Input: FV= 1000, PMT=6%*1000 = 60, I/Y=12, N=10
Solve for PV as -660.99
B: Price of Bond A= $1000
Using financial calculator
Input: FV= 1000, PMT=12%*1000 = 120, I/Y=12, N=5
Solve for PV as -1000
Price of Bond B= $783.71
Using financial calculator
Input: FV= 1000, PMT=6%*1000 = 60, I/Y=12, N=5
Solve for PV as -783.71
C: Price of Bond A =$1000
Price of Bond B = $1000
(Since only the principal is paid at maturity)
Add Answer to:
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