Answered

At Westonci.ca, we connect you with experts who provide detailed answers to your most pressing questions. Start exploring now! Join our Q&A platform and connect with professionals ready to provide precise answers to your questions in various areas. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently.

Consider a 12-year, 12 percent annual coupon bond with a required rate of return of 10 percent. The bond has a face value of $1,000. (1) What is the fair present value of the bond? (2) If the required rate of return rises to 11 percent, what is the fair present value of the bond? (3) What has been the percentage change in the fair present value?

Sagot :

madethisfortwitch1

Answer:

1136.27

1064.92

-6.279%

Explanation:

The basic pricing formula for a bond is just the present value of the coupon payments and the redepmtion

I solved this using annuities, my work is attached below

You can also solve using financial calculators but I'll assume you don't have access to one

View image madethisfortwitch1
We appreciate your time. Please come back anytime for the latest information and answers to your questions. Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. Thank you for visiting Westonci.ca. Stay informed by coming back for more detailed answers.