14. A bond promises to pay $100 interest per year for 20 years and also to...
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14. A bond promises to pay $100 interest per year for 20 years and also to pay $1,000 at the end of 20 years. What is the coupon rate on this bond? What is the present value (that is the market price) of the bond if the current market rate of interest is 15%? What would happen to the present value of the bond if the current market rate of interest fell to 10 percent? Discuss and show your calculations (it is not enough to show me the steps you used on a hand held calculator to get the answers; you need to set up the problem) or you will not get any credit. 14. A bond promises to pay $100 interest per year for 20 years and also to pay $1,000 at the end of 20 years. What is the coupon rate on this bond? What is the present value (that is the market price) of the bond if the current market rate of interest is 15%? What would happen to the present value of the bond if the current market rate of interest fell to 10 percent? Discuss and show your calculations (it is not enough to show me the steps you used on a hand held calculator to get the answers; you need to set up the problem) or you will not get any credit.
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
Posted Date:
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