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