Bonds- Market Value, Issuance price
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A ten-year bond, with par value equals $1000, pays 10% annually. If similar bonds are currently yielding 6% annually, what is the market value of the bond? Use semi-annual analysis.
a) $1,000.00
b) $1127.50
c) $1297.85
d) $2549.85
A 30-year zero-coupon bond that yields 12% percent is issued with a $1000 par value. What is the issuance price of the bond (round to the nearest dollar)?
a) $33
b) $83
c) $8333
d) $none of the above
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Solution Summary
The solution calculates the Market Value of a bond that is paying semi-annual interest and issuance price of a zero-coupon bonds.
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A ten-year bond, with par value equals $1000, pays 10% annually. If similar bonds are currently yielding 6% annually, what is the market value of the bond? Use semi-annual analysis.
a) $1,000.00
b) $1127.50
c) $1297.85
d) $2549.85
Answer: c) $1297.85 (see calculation below)
To calculate the price of the bond we need to calculate / read from tables the values of
PVIF= Present Value Interest Factor
PVIFA= Present Value Interest Factor ...
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