Question: Assuming that the current interest rate is 3 percent, compute the present value of a five-year, 10 percent coupon bond with a face value of
Assuming that the current interest rate is 3 percent, compute the present value of a five-year, 10 percent coupon bond with a face value of $1,000. What happens when the interest rate goes to 4 percent? What happens when the interest rate goes to 2 percent? Instructions: Enter your responses rounded to the nearest penny (two decimal places). PV at an interest rate of 3% = $ 1091 PV at an interest rate of 4% = $ 1044.50 The present value falls when the interest rate rises to 4 percent. PV at an interest rate of 2% = $ 1141.60 The present value rises when the interest rate falls to 2 percent
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
