Explore BrainMass

Present value of bond

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

See attached file.

Please refer to tab 3-16 to solve and explain.
A 10-year U.S. Treasury bond with a face value of $10,000 pays a coupon of 5.5%
(2.75% of face value every six months). The semiannually compounded interest rate
is 5.2% (a six-month discount rate of 5.2/2 = 2.6%).

a. What is the present value of the bond?
b. Generate a graph or table showing how the bond's present value changes for semiannually
compounded interest rates between 1% and 15%.

© BrainMass Inc. brainmass.com March 21, 2019, 9:14 pm ad1c9bdddf


Solution Preview

Please see the attachment.
Please see the cell formula for calculation details.

The value of the bond is the ...

Solution Summary

The solution explains how to calculate the present value of bond and how it changes with interest rates