# Solve using TVM and provide detailed explanation Bond ABC is a 10-year, $1,000 par value bond which

Fantastic news! We've Found the answer you've been seeking!

## Question:

Solve using TVM and provide detailed explanation

Bond “ABC” is a 10-year, $1,000 par value bond which pays a 6% coupon with quarterly payments during its first five years (you receive $15 a quarter for the first 20 quarters). During the remaining five years the security has an 8% quarterly coupon (you receive $20 a quarter for the second 20 quarters). At the end of 10 years (40 quarters) you will also receive the par value. Bond “DEF” is another 10-year bond issued by the same company, and it has a 10% semiannual coupon. This bond is selling at its par value $1,000 and has the same risk as the bond “ABC”. Given this information, what should be the price of the bond “ABC”?

**Related Book For**

## John E Freunds Mathematical Statistics With Applications

ISBN: 9780134995373

8th Edition

Authors: Irwin Miller, Marylees Miller