Coupon payment = 5%*1200
Coupon payment = $60
Case 1:
Current price = 60*(1-1/(1+3%)^3)/.03 + 1200/1.03^3
Current price = $1267.89
Case 2:
Current price = 60*(1-1/(1+5%)^3)/.05 + 1200/1.05^3
Current price = $1200
Case 3:
Current price = 60*(1-1/(1+5%)^4)/.05 + 1200/1.05^4
Current price = $1200
Case 4:
Current price = 60*(1-1/(1+3%)^6)/.03 + 1200/1.03^6
Current price = $1330.01
Case 5:
Current price = 60*(1-1/(1+7%)^6)/.07 + 1200/1.07^6
Current price = $1085.6
So, following table is prepared.
Consider a bond with a 5% annual coupon and a face value of $1,200. Complete the...
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