Knight, Inc., has issued a three-year bond that pays a coupon of 4.71 percent. Coupon payments...

Knight, Inc., has issued a three-year bond that pays a coupon of 4.71 percent. Coupon payments are made semiannually. Given the market rate of interest of 4.98 percent, what is the market value of the bond?

Expert Solution

Computatio Of Value Of The Bond

a	Semi-annual Coupon Amount	$ 23.55
	($1000*4.71%/2)
b	Present Value Annuity Factor for (6 Years,2.49%)	5.509968
c	Present Value Of Annual Interest (a*b)	$ 129.76
d	Redemption Value	$ 1,000.00
e	Present Value Factor Of (6 Years,2.49%)	0.86280
g	Present Value Of Redemption Amount (d*e)	$ 862.80
f	Bond Value (c+g)	$ 992.56

jeff jeffy answered 3 years ago

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