Why do the differences in PVs occur

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Reference no: EM131984252

1. Say you buy a new 10 year bond with a 4% annual coupon and a face value of $1000. After four years you decide to sell in, meaning that there are six (6) years left to maturity. The interest rate is the same. What is the selling price of the bond (show your calculations)

2. Find the present value of $600 due in the future under each of these conditions:

A. 11% nominal rate, semiannual compounding, discounted back 10 years. Round your answer to the nearest cent.

B. 11% nominal rate, quarterly compounding, discounted back 10 years. Round your answer to the nearest cent.

C. 11% nominal rate, monthly compounding, discounted back 1 year. Round your answer to the nearest cent.

Why do the differences in the PVs occur?

Reference no: EM131984252

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