Basin ex. 7 1 a
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This document shows the calculation of the price of a 12-year bond with a par value of $1,000, a coupon rate of 8%, and an annual rate of return of 12%. The calculation involves taking the sum of the discounted annual coupon payments plus the discounted par value at maturity. The result of the calculation is that the price of the bond is $752.23.
Basin ex. 7 1 a
- 2. Solution n n ( par * coupon%) å (1+ return%)n x=1 par å (1+return_rate)last _n x Par value= 1,000 Coupon interest= .08 Rate of return= .12 N= 12 1 80 å (1+.12)1 1 7 80 å (1+.12)7 1 2 80 å (1+.12)2 1 8 80 å (1+.12)8 1 3 80 å (1+.12)3 1 9 80 å (1+.12)9 1 4 80 å (1+.12)4 1 10 80 å (1+.12)10 1 5 80 å (1+.12)5 1 11 80 å (1+.12)11 1 6 å (1+.12) 80 6 1 12 80 å (1+.12)12 1 12 å (1+.12) 1000 12 1
- 3. Answer • $752.23 • You can insert solution here or just final answer baby and write a brief answer baby