Question

1.Reconsider the example above, where you are contemplating the purchase of the coupon bond with a...

1.Reconsider the example above, where you are contemplating the purchase of the coupon bond with a face value of $1,000, which matures in 14 years, and pays 3.15% (annual) coupons. Now, If you require a return of 3.75% on this instrument, how much would you offer to pay for it today? [Present the answer rounded to two decimal places. For instance 1045.16]

2. You are considering the purchase of a Pure Discount Bond with a Face Value of $10,000, which matures in three years. If you desire a return of 3.35%, how much would you bid for the bond today? (Round your answer to two decimal places, e.g. 9274.36) (answer was not 9058.76)

Thank you!

0 0
Add a comment Improve this question Transcribed image text
Answer #1

1.
Using financial calculator
FV=-1000
N=14
PMT=-3.15%*1000=-31.5
I/Y=3.75%
CPT PV=935.56

2.
Using financial calculator
FV=-10000
N=3*2
PMT=0
I/Y=3.35%/2
CPT PV=9051.38

Add a comment
Know the answer?
Add Answer to:
1.Reconsider the example above, where you are contemplating the purchase of the coupon bond with a...
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