what is the current price of a $1000 per bond with 8 years leftto maturity,...

what is the current price of a $1000 per bond with 8 years left to maturity, a coupon rate of 10% paid monthly, assuming the similarly compounded market interest rate is 12%?

Expert Solution

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N = 8*12 = 96 (The Bond is for 8 Years, as monthly, so multiplied by 12)

PMT => 10% of 1,000 = 100 / 12 = -8.3333 ( The coupon 10% is on Face Value, as monthly, so divided by 12)

FV = -1,000 (The Face value of bond is $1,000)

I/Y = 12/12=1 (Market rate is 12%, as monthly, so divided by 12)

CPT + PV = 897.4517

The current price of the bond is $897.4517

jeff jeffy answered 2 years ago

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