Question

2. Suppose a bond pays $1000 two years from now. The current market rate is 4%...

2. Suppose a bond pays $1000 two years from now. The current market rate is 4% on the saving account. How much will pay for this if you purchase this bond today?
0 0
Add a comment Improve this question Transcribed image text
Answer #1

Given

Discount rate=i=4%

Time period=n=2 years

Future value of deposit=FV=$1000

Price of bond=Present value of future cash flow=FV/(1+i)n

Price of bond=1000/(1+4%)2=$924.56

Add a comment
Know the answer?
Add Answer to:
2. Suppose a bond pays $1000 two years from now. The current market rate is 4%...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT