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What is the present value or worth of this bond

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Reference no: EM132980638

Question - Jimmy has a bond with a $1,000 face value and a coupon rate of 9.5% paid semiannually. It has a five-year life.

a) If investors are willing to accept a 14 percent rate of return on bonds of similar quality, what is the present value or worth of this bond? It would help if you can show the work.

b) What is the impact of paying interest semi-annually rather than annually? Could you help explain.

Reference no: EM132980638

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