Big Insurance Corporation's bonds have a 30-year maturity, a zero% coupon rate with interest paid semiannually, and
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Big Insurance Corporation's bonds have a 30-year maturity, a zero% coupon rate with interest paid semiannually, and a par value of $1,000. Note that you should still use semi–annual compounding when you compute the bond’s intrinsic value even though the bonds pay no coupon interest. The nominal required rate of return on these bonds is 4.75%.
What is the bond’s intrinsic value, or what should they be selling for?
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
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