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  • Taghi Mammadov 3820221052

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    Taghi Mammadov
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    The document discusses market values for bonds with different interest rates. For question 1, a bond with a coupon rate of 8% and market required return of 15% has a market value of $939.13. For question 2, if the required return drops to 12% the value is $964.29, and if it drops to 8% the value is $1000. For question 3, a bond with a 15% coupon rate has a value of $1000, and if the required return drops to 8% the value increases to $1064.81.

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    The document discusses market values for bonds with different interest rates. For question 1, a bond with a coupon rate of 8% and market required return of 15% has a market value of $939.13. For question 2, if the required return drops to 12% the value is $964.29, and if it drops to 8% the value is $1000. For question 3, a bond with a 15% coupon rate has a value of $1000, and if the required return drops to 8% the value increases to $1064.81.

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    18 views1 page

    Taghi Mammadov 3820221052

    Uploaded by

    Taghi Mammadov
    The document discusses market values for bonds with different interest rates. For question 1, a bond with a coupon rate of 8% and market required return of 15% has a market value of $939.13. For question 2, if the required return drops to 12% the value is $964.29, and if it drops to 8% the value is $1000. For question 3, a bond with a 15% coupon rate has a value of $1000, and if the required return drops to 8% the value increases to $1064.81.

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    © All Rights Reserved
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    Taghi Mammadov 3820221052

    Question 1

    1000*1.08/1.15=939.13 the market value is 939.13

    Question 2

    drop to 12% :1000*1.08/1.12=964.2857143


    the market value is 964.29
    drop to 8%: 1000 * 1.08/1.08= 1000

    Question 3

    If the coupon rate is 15% the market value is 1000


    If the market required return rate drop to 8%, the
    market value will increase to
    1000*1.15/1.08=1064.81

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