Question

# ​(Related to Checkpoint​ 9.4)  ​(Bond valuation) A bond that matures in 16 years has a ​\$1000...

​(Related to Checkpoint​ 9.4)  ​(Bond valuation) A bond that matures in 16 years has a ​\$1000 par value. The annual coupon interest rate is 14 percent and the​ market's required yield to maturity on a​ comparable-risk bond is 16 percent. What would be the value of this bond if it paid interest​ annually? What would be the value of this bond if it paid interest​ semiannually?

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 What would be the value of this bond if it paid interest​ annually we have to use financial calculator to solve this problem Put in calculator FV 1000 PMT 1000*14% 140 I 16% N 16 Compute PV (\$886.63) therefore bond price = \$886.63 What would be the value of this bond if it paid interest​ semiannually we have to use financial calculator to solve this problem Put in calculator FV 1000 PMT 1000*14%/2 70 I 16%/2 8.00% N 16 Compute PV (\$911.49) therefore bond price = \$911.49

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