Question: 6. You are considering adding a $1,000, 25-year bond to your portfolio. It has a coupon rate of 8%, which is paid annually, and your

6. You are considering adding a $1,000, 25-year bond to your portfolio. It has a coupon rate of 8%, which is paid annually, and your required return is 10%. What is the current price of the investment? Solution: PMT = $1,000 8% = $80 FV = $1,000 N = 25 I/Y = 10% PV (current price) = $818.46

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