Let's say a Microsoft $1,000 bond has a coupon interest rate of 4.00% and a maturity date
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Question:
Let's say a Microsoft $1,000 bond has a coupon interest rate of 4.00% and a maturity date 10 years from now, 2030.
a) Compute the Present Value of the interest payments to be received over the next 10 years.
b) Compute the Present Value of the above bond, with a par value of $1,000 and which matures in 10 years.
c) What is the total amount of the Present Value of the interest payments and the Present Value of the face amount of the bond?
d) An investor buys a $1000 bond for a price below par ($920) and the coupon interest rate is 4.00%. What is the current yield of this bond?
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