Value of a bond
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Calculate the value of a $1,000 bond which has 10 years until maturity and pays quarterly interest at an annual coupon rate of 12%. The required return on similar-risk bonds is 20%.
A. $845.66
B $2,201.08
C $835.45
D $656.77
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Solution Summary
Value of a bond has been calculated by discounting the cash flows from the bond.
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Calculate the value of a $1,000 bond which has 10 years until maturity and pays quarterly interest at an annual coupon rate of 12%. The required return on similar-risk bonds is 20%.
A. $845.66
B $2,201.08
C $835.45
D $656.77
Answer: D $656.77
The calculations are shown below
Calculating Value of a bond
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