Suppose a U.S. government bond promises to pay $2,249.73 three years from now. If the going interest
Question:
Suppose a U.S. government bond promises to pay $2,249.73 three years from now.
If the going interest rate on 3-year government bonds is 4%, how much is the bond worth today? How much is it worth today if the bond matured in 5 years rather than 3?
How much is it worth today if the interest rate on the 5-year bond was 6% rather than 4%?
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Step by Step Answer:
To calculate the present value of a US government bond we can use the formula for present value PV ...View the full answer
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Related Book For 
Fundamentals Of Financial Management
ISBN: 9780357517574
16th Edition
Authors: Eugene F. Brigham, Joel F. Houston
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