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    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 Preview

    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
    To calculate the price of ...

    Solution Summary

    Value of a bond has been calculated by discounting the cash flows from the bond.

    $2.19

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