BankMart Inc. recently issued bonds that mature in 8 years. They have a par value of...

BankMart Inc. recently issued bonds that mature in 8 years. They have a par value of $1,000 and an annual coupon of 4%. Your required rate of return is 10%.

Hint:

This bond pays a fixed amount of coupon at the end of each period and pays the par value when it matures.

annual coupon payment = par value * annual coupon rate.

What is the maximum price you want to pay for the bond?

Solutions

Expert Solution

jeff jeffy answered 2 years ago

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