Compute the value of a bond with five years

Reference no: EM13720415

Write down the right answer of the given questions

Question 1- Assume that the current rate of interest on bonds is 3 percent. Compute the value of a bond with 5 years to maturity, pays a 5 percent coupon ($50 interest payment) each year, and has a face value of $1,000.

Part 1- Compute PV in each scenario as well.

Part 2-What happens to the price (PV) if the interest rate goes to 4 percent?

Part 3- What if it was 2 percent?

Question 2- Explain why hiring an investment manager based soley on the high return he has been able to earn recently may not be a good idea?

I need help to compute the PV in above problem.

Reference no: EM13720415

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