A 7 3/5% bond matures in 10 years. Assuming the coupon is paid annually and the...

Free

80.2K

Verified Solution

Question

Finance

A 7 3/5% bond matures in 10 years. Assuming the coupon is paidannually and the par value is $1,000, what is the value of thisbond to an investor requiring a 9% rate of return?
A) $895.71
B) $954.05
C) $910.15
D) $848.83

Answer & Explanation Solved by verified expert

4.3 Ratings (784 Votes)

Par value= future value= $1,000

Time= 10 years

Coupon rate= 7 3/5% 7.60%

Coupon payment= 0.076*1,000= $76

Rate of return= 9%.

The value of the bond is calculated by computing the present value.

The present value is computed by entering the below in a financial caclcualtor:

FV= 1,000

N= 10

PMT= 76

I/Y= 9

Press the CPT key and PV to compute the present value.

The value obtained is 910.15.

Therefore, the value of the bond is $910.15.

Hence, the answer is option c.

In case of any query, kindly comment on the solution.

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

A 7 3/5% bond matures in 10 years. Assuming the coupon is paid annually and the...

Free

80.2K

Verified Solution

Question

Finance

A 7 3/5% bond matures in 10 years. Assuming the coupon is paidannually and the par value is $1,000, what is the value of thisbond to an investor requiring a 9% rate of return?
A) $895.71
B) $954.05
C) $910.15
D) $848.83

Answer & Explanation Solved by verified expert

Get Answers to Unlimited Questions

Membership Benefits:

Transcribed Image Text

Other questions asked by students

A 7 3/5% bond matures in 10 years. Assuming the coupon is paid annually and the...

Free

80.2K

Verified Solution

Question

Finance

A 7 3/5% bond matures in 10 years. Assuming the coupon is paidannually and the par value is $1,000, what is the value of thisbond to an investor requiring a 9% rate of return?A) $895.71B) $954.05C) $910.15D) $848.83

Answer & Explanation Solved by verified expert

Get Answers to Unlimited Questions

Membership Benefits:

Transcribed Image Text

Other questions asked by students

A 7 3/5% bond matures in 10 years. Assuming the coupon is paidannually and the par value is $1,000, what is the value of thisbond to an investor requiring a 9% rate of return?
A) $895.71
B) $954.05
C) $910.15
D) $848.83