Asked by
Fermit The Krog
on Oct 20, 2024Verified
A coupon bond that pays interest semiannually has a par value of $1,000, matures in 8 years, and has a yield to maturity of 6%. If the coupon rate is 7%, the intrinsic value of the bond today will be ________.
A) $1,000
B) $1,062.81
C) $1,081.82
D) $1,100.03
Coupon Bond
A type of bond that pays the holder a fixed interest payment (coupon) periodically until maturity, at which point the principal is also repaid.
Semiannually
Occurring twice a year; a term often used in the context of paying interest or dividends every six months.
Intrinsic Value
The actual, fundamental worth of an asset, determined through financial analysis without reference to its market price.
- Assess the yield to maturity and fathom its significance.
Verified Answer
MS
Learning Objectives
- Assess the yield to maturity and fathom its significance.
Related questions
A Coupon Bond That Pays Interest of 4% Annually Has ...
Consider the Following $1,000 Par Value Zero-Coupon Bonds ...
You Purchased a 5-Year Annual-Interest Coupon Bond 1 Year Ago ...
Analysis of Bond Returns Over a Multiyear Horizon Based on ...
$1,000 Par Value Zero-Coupon Bonds (Ignore Liquidity Premiums) ...