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# Present value of bond

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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%.

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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

\$2.19
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