Reference no: EM132643401
Problem:
1. What is the price of a bond given the following information?
2. What is the net dollar amount you will pay for this bond on November 30, 2020?
Face Value: $1,000
Coupon: 6%, paid twice a year on June 30 and December 31.
Matures: December 31, 2024
Date Purchased: You purchased the bond in the secondary market on November 30, 2020. (Assume today is November 30, 2020; the day you purchase this bond)
Current market rate (rate used to discount the future cash flows to present value) is 4.0%.
3. If current market rates were 8% (discount rate used to calculate Present Value of the cash flows) what would the price of the bond be?
4. And what is the net dollar amount you would pay for this bond on November 30, 2020?