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Determining the value of the bond

Consider a bond with par value of EUR 1,000 and maturity in three years, and that pays a coupon of 5% annually. The spot rate curve is as follows: 1-year, 6%; 2-year, 7%; and 3-year, 8%. The value of the bond is closest to:

A. 904

B. 924

C. 930

D. 950

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Finance Basics: Determining the value of the bond

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Determining the value of the bond

Reference No:- TGS0673600

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

Q : Importance of recognizing the signs of stalking

Q : Time of issuance

Q : Prepare a brief memo to tcv company management

Q : Prepare the purchases budget for the first six months

Q : Determining the value of the bond

Q : Find current yield or cost of the preferred stock

Q : Interview a senior citizen

Q : Income under variable costing

Q : Short t-bond futures position

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Determining the value of the bond

Reference No:- TGS0673600

Recent Questions Asked Finance Basics

Q : Importance of recognizing the signs of stalking

Q : Time of issuance

Q : Prepare a brief memo to tcv company management

Q : Prepare the purchases budget for the first six months

Q : Determining the value of the bond

Q : Find current yield or cost of the preferred stock

Q : Interview a senior citizen

Q : Income under variable costing

Q : Short t-bond futures position

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