Question
The price of a bond is equal to the sum of the present values of its...
The price of a bond is equal to the sum of the present values of its future payments. Suppose a certain bond pays $50 one year from today and $1,050 two years from today. What is the price of the bond if the interest rate is 5 percent?
the answer is: $1,000 (show work please)
You have a choice among three options. Option 1: receive $900 immediately. Option 2: receive $1,200 one year from now. Option 3: receive $2,000 five years from now. The interest rate is 15 percent. Rank these three options from highest present value to lowest present value. the answer is: Option 2; Option 3; Option: 1 (show work please)
Homework Answers
Answer #1
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