Estimating Price of a coupon paying bond
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What is the price of a 10 year $1000 Par Value Bond if the coupon rate is 10% (pays $100 a year if dividends paid annually) with 8 years to go to maturity. Interest rates (expected rate of return) is 8%?
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Solution Summary
Solution describes the formula and steps for calculating price of a coupon paying bond.
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Solution:
The Fair value of a bond is given by
Value of bong = Present value of annual ...
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- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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