A corporate bond has a $10,000 face value and offers a 7% coupon rate. The bond matures at the end of three years. If the interest rate is 7%, the present discounted value of the bond is $____.

Question

Quizplus · Accepted Answer

The present discounted value of the bond equals its face value because the coupon rate (7%) matches the interest rate (7%). This means the bond's cash flows are discounted at the same rate they are generated, making the present value equal to the face value of $10,000.

A Corporate Bond Has a $10,000 Face Value and Offers