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Chapter 6b

# Chapter 6b - Chapter 6b 1 Calculate the value of a bond...

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Chapter 6b 1. Calculate the value of a bond that matures in 30 years and has a face value of \$1000. The coupon rate is 7% and the investor’s required rate of return is 11%. 2. Inkie McInkerton Inc. is about to issue a 25 year bond with the following terms: \$1000 face value, an 8% coupon payment, and a required market return of 5.5%. What is should be the price of this bond? 3. You are considering buying a bond with the following terms: \$1000 face value, a 5% coupon rate, a price of \$972. How long will the term of this bond be if you require a 6% return?(Round to nearest year) 4. You Inc. is issuing bonds with the following terms: \$1000 face value, 10% coupon rate, and a market discount rate of 8%. If it is priced at \$1225.16, how long should You’s bond term last until maturity? 5. You are considering buying a 15 year semi-annual bond with a \$1000 face value, 12% coupon rate, and a price of \$790. What rate of rate of return will this bond give you? 6. What is the duration of a 10-year bond that has annual coupon payment of 6% and a \$1000 face value? The discount rate is 12%.

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Chapter 6b - Chapter 6b 1 Calculate the value of a bond...

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