Assignment on funtown bonds?

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Reference no: EM132697961

FunTown Bonds?

Bond has 20 years to maturity?$1,000 par value?3%

Coupon Interest Rate

?You (the investor) require a 5% rate of return on this bond

?a. Calculate the annual interest payment (coupon payment)

??b. Value the bond (using financial calculator).

The PV is the economic/intrinsic value of the bond to this investor based on his required rate of return of 5%.

c.?You just checked the market price of the bond on your trading platform. You can purchase the bond for $785.23 (price quoted as 78.523). Should you buy the bond at this price????

d.?Is this a premium or discount bond?

Reference no: EM132697961

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