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Calculate the value of bond B shown in the following table, all of which pay interest semiannually. <image 1> | The correct answer is $561.25 First, calculate the semiannual coupon payment: 60 Next, calculate the number of semiannual periods until maturity: 20 years * 2 = 40 periods Then, calculate the present value of the bond's future cash flows using the semiannual yield to maturity of 6%: 60 / (1 + 0.06)^2 + ... + 1000 / (1 + 0.06)^40 = $561.25 Expected Answer: 1000 Difficulty: Hard Subfield: Managerial Finance |