Suppose a friend of yours invested in an outstanding bond with Luminous Lighting. The bond has...
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Suppose a friend of yours invested in an outstanding bond with Luminous Lighting. The bond has an annual coupon rate of 8%, a remaining maturity of 16 years, and a $1,000 par value. The market interest rate is currently 12%. In order to use a financial calculator to compute how much your friend paid for the bond, you will need to know the following information: Input Keystroke Output 16 N 12% Because the market price is I/Y PV $80 PMT $1,000 FV The absolute value of the present value your calculator computed is the market price of the bond. the par value, your friend purchased a bond. Suppose a friend of yours invested in an outstanding bond with Luminous Lighting. The bond has an annual coupon rate of 8%, a remaining maturity of 16 years, and a $1,000 par value. The market interest rate is currently 12%. In order to use a financial calculator to compute how much your friend paid for the bond, you will need to know the following information: Input Keystroke Output 16 N 12% Because the market price is I/Y PV $80 PMT $1,000 FV The absolute value of the present value your calculator computed is the market price of the bond. the par value, your friend purchased a bond.
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Answer rating: 100% (QA)
To determine the price your friend paid for the bond we will need to calculate the present value of the bonds cash flows The cash flows consist of the ... View the full answer
Related Book For
Fundamentals Of Investing
ISBN: 9780135175217
14th Edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
Posted Date:
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