Given a 5 year instrument with a face value amount of $1000 an annual interest rate of 9%, with semiannual interest payments and repayment at the end of 5 years, set up the calculation of the PV of cash flows at 11% yield. Would the value of this note be greater than, less than or equal to $1000? Why?
**Please write out formula manually or attach versus excel calculation.
The present value is less than face value because the market ...
The solution computes present value of bond with semi-annual payments in an excel spreadsheet.