What is the value of a bond that matures in three years, has an annual coupon payment of $110, and a par value of $1,000? Assume a required rate of return of 11%, and round your answer to the nearest $10.

Question

Quizplus · Accepted Answer

The bond's value is calculated using the present value of its future cash flows, which include the annual coupon payments and the par value at maturity. With a required rate of return of 11%, the bond's value equals its par value of $1,000, as the coupon rate matches the required rate of return.

What Is the Value of a Bond That Matures in Three